we're more than 78,000 people looking out for more than 70 million americans. that's health in numbers. unitedhealthcare. at the top of the show, we asked you why are you awake? producer john tower has your answers. john, please be kind. >> we have a special one this morning. the brian williams writes, i love "way too early," but bill karins makes me nervous. i associate him with severe weather, counterclockwise flow and wind gusts of 70 miles an hour. i love bill but can't watch right now because i'm preparing

for a storm surge of some sort. what happened to the other guy who used to host? >> the other guy, i think, is doing okay. as far as my death, destruction and devastation forecast, i think they'll be back very soon. anchor guy bri, you'll be just fine. no need to be nervous. "morning joe" starts right now. ♪ ♪ it's the most wonderful time of the year ♪ good morning. it's thursday, november 29th. with us here on set, look at the tree all lit up. beautiful. lights went on last night right outside our building here at 30 rock. joining us this morning, the chairman of deutsche inc., donny deutsch, former treasury official and "morning joe" economic analyst steve rattner, political analyst and former chairman of the rnc, michael steele, in washington anchor for bbc "world news america," katty kay. >> "way too early" with bill karins. >> i'm going to say it again, a star was born. >> don't you think? >> i mean, just elegant, on the

money. >> yes. >> glib in the right kind of way, gravitas, all there. >> i love it. >> awake. >> awake. >> that's always helpful. >> the guy who used to do it before, the tall guy, you know that one? >> a little droopy. >> rarely showed up for work. and when he did, it didn't look like he was all there, quite frankly. also, bill karins, of course, the big story of the day, the powerball. $550 million, something like that. did anybody buy a ticket? >> no. >> yeah. i did. but i'm still here which means i didn't win. if i did, out the door. >> 1 in 175 million chance. >> it's a loser's game. >> oh, steve. >> do you have charts? >> steve, what are you saying? loser? willie, didn't you? >> i did, last night. >> i will say an interesting sidebar, i used to do advertising for publisher's clearinghouse. without exception, the people that got the $25 million prize, destroyed their lives. >> that's true. >> they quit their jobs.

>> there are a lot of people out there who would like to experience that for themselves. >> experience the self-destruction. >> give me the moment, thank you very much. >> that whole thing of being removed from the people you've lived with who are your friends, your neighborhood, your community, that amount of money suddenly takes you out of that group. >> spared me from having people i don't know who call themselves relatives saying hey, can you help a brother out? >> notice how rattner and deutsche pooh-poohing the lottery. walking-around money. walking-around money. talking about big cash, let's get to the fiscal cliff. some developing news this morning. "politico" hassen e an exclusiv report that president obama and representative boehner had a "curt" telephone conversation. speak speaker boehner says he wants to move his position on tax rates but the president won't budge. he told him, if he has an alternative plan, he ought to put that forward rather than

focusing on entitlements. the white house will send tim geithner to capitol hill for a meeting. yesterday the president met with ceos including at&t, goldman sachs, coca-cola and caterpillar, many of whom said after the meeting they emerged hopeful a deal could be struck to avoid the fiscal cliff. in another meeting with middle-class americans, president obama said he believes the framework for a deal could be in place before christmas. >> and i'll go anywhere, and i'll do whatever it takes to get this done. it's too important for washington to screw this up. now's the time for us to work on what we all agree to, which is let's keep middle-class taxes low. that's what our economy needs. that's what the american people deserve. >> white house also turning to social media has a twitter hash tag to spread its message. >> today i'm asking congress to listen to the people who sent us here to serve. i'm asking americans all across the country to make your voice

heard. tell members of congress what a $2,000 tax hike would mean to you. call your members of congress. write them an e-mail, post it on their facebook walls. you can tweet it using the hash tag #my2k. not y2k, my2k. >> i think that's going to push us into the promised land. >> i was incredibly encouraged. i had been depressed and then i said this could actually get done with a hash tag. >> you're very pessimistic. we heard erskine bowles saying yesterday, he thinks it's less than a one in three chance, of course, co-author of the simpson-bowles plan. >> i was in washington earlier this week and met with a lot of these characters. the bottom line is there have been a lot of meetings, most of them between people who are not

decision-makers, big business or laborer this or that. what's going on between decision-makers is little to nothing. the white house made a proposal for $1.6 trillion of revenues, the famous rate hikes and a bunch of other stuff. and now it's the republicans' turn to make a proposal as to what they want particularly on the entitlements side which is their hot-button issue. but the republicans do not seem to want to make such a proposal. there's been some conversation at the staff level over this past ten days, even, really since that first sort of kumbaya meeting. but no progress. literally no progress. no progress. and so i think the mood right now among people like erskine bowles who pay close attention to this say that we have a very reasonable chance of going over this cliff. every hour is ticking by, every day is ticking by. this is not simply buying a house. this is not a deal you can kind of get done at the last minute. it's very complicated. and nothing good is happening. >> michael, where is the opportunity for movement for both sides? we'll start with the

republicans. john boehner said again yesterday, we're open to raising revenue, but we just won't go with a higher tax rate even on the wealthiest americans. that means closing loopholes, but that doesn't get us there. where do you see republicans, and then on the other side, the white house willing, at least, to move a little bit? >> well, i don't see them necessarily being willing right now. i think to the professor's point, they're sort of jockeying to see exactly where they can find that kind of give in the system. i think when this thing gets played out at the end, they're going to get right up to cliff on new year's eve, we're all going to be hugging cliff and giving cliff a kiss on the cheek. >> hugging cliff. >> but we're not going over it. i just don't think we're going to go over it. they're going to push this thing out about six months into probably the beginning of the second quarter to give themselves room to sit down and negotiate because boehner and company are putting a very interesting dynamic in play, which has always been there for the republicans. we're happy to talk to you about the rates. we're happy to talk to you about all the things you want, mr. president, but you've got to give us some clue, some clear

sign that you're going to be serious about making the cuts in spending that includes entitlement reform, that includes most importantly, tax reform. you know, "the washington post" this morning, lead story, mortgage interest deductions on the table. no, it's not. you're not going to have a serious discussion about taking off the mortgage interest rate deduction for anyone. i don't care how much money they make. without putting that as part of a larger tax reform measure. and that's not what they're talking about right now. they're not at that level of seriousness. what we're talking about is a lame-duck congress that's on its way out. the senate's getting two more members. their numbers are going to bump up to 55. you're going to get more members in the house on the democratic side. both leaderships in the house and the senate on the democratic side want that reset to go into new discussions. boehner knows that. and so they're puddling around the edges right now, i think to professor's point. >> i want to talk about tax reform and pick up a point you mentioned yesterday. as far as if we go from the 35 to the 39, we don't get there.

we need capital gains and dividends. i want to talk about real-life experience. i sold my business 2000, 28% capital gains. great capital there for me. i have not done one thing differently in the last 11 years had it been 13% or 15%. this concept that if we raise capital gains, we are going to somehow destroy the economy, trickle down is not going to work, is false. is absolutely unequivocally false. and until forget even entitlements, on the revenue side we don't move to capital gains and dividends, we're not going to make a dent in this thing. >> which is what warren buffett said, it's not going to stop people from investing. the republican fear is that we agree to revenue hikes, but we don't actually ever get these spending cuts, the spending cuts are pushed down to the road and they never materialize. i was in columbus, ohio, during the campaign. there's an amazing guy, the mayor of columbus, a long-term democrat, and he's done a deal on finances. when the crisis hit, he cut as much as he could in the back

office, things people didn't see. he hadn't cut enough. sew went to the business community and said i can carry on cutting. i can put police services, park services, things that will actually affect the city of people's desire to live here, or we can have a revenue hike. and because he had already done the cuts in the back office and he could lay them out, the business community 100% supported a revenue hike. it was a really interesting model in one city. okay, it's one city. it's not the country, but it's an interesting model of how you can use cuts. >> i wasn't going to object what you said, i was going tack to what michael said. i don't sense the republicans saying they're flexible on rates. they keep saying we cannot increase marginal rates. we cannot increase marginal rates. donnie repeated the warren buffett point which is a great point and i believe it that small increases in marginal rates don't affect people's ability to work. republicans concerned they're not going to get their spending cuts, but they can't unless they put their spending cuts on the table. there is no republican proposal. for spending cuts in medicare or anything else. you can't have a deal unless

both sides make proposals. and right now all we have is a tax proposal from the democrats. we have no spending proposal from the democrats. we have no tax proposal from the republicans. we have no spending proposal from the republicans. and we've been at this now for a couple weeks, really since the day after the election. that's why some of us are a little pessimistic. >> a couple years. because the reality of it is whether you're going back to the sequestration bill of 2010, 2011 or you're talking about what is now known as the fiscal cliff. neither side has been very willing to really deal with the nuts and bolts, the reality of tax rates, reality of spending cuts, the reality of tax reform. that's really what next year's going to be all about. right now i just don't see -- i mean, can we just get real here? we're talking five weeks tops before the end of this lame-duck session, end of the year. and these guys are going to get done in five weeks what they haven't been able to do in five months?

>> here's the thing. >> we'll do it when it comes to the cliff. >> yeah, we have a deadline. >> look at human behavior for a second. the next five weeks is the chance for everybody. would would they ever be incentivized to make a deal before they have to? look at behavior. and behavior common sense tells you it's going to happen, but it's not going to happen soon. >> i understand that scenario. i spent 30 years doing deals. i know how deals work, midnight, back room, the clock is ticking. two things to remember. this is not like buying a car. this is a complicated deal. it's got so many moving pieces. you can't go in there december 24th and say okay, now it's time to get serious and get something done. that's point one. point two is i detect very little appetite in aush wawashio simply kick the can down the road, to do nothing. we ran out of time. let's extend the fiscal cliff for six months and then get serious. nobody seems to want to do that. everybody wants at least a down payment, at least an agreement on the outlines of a tax program and a program on spending and

then maybe they would give it more time to finish. >> we're still kicking the can down the road. you're absolutely right. you're going to get a short. term, let's get through the first quarter of 2013-type solution. but the reality of dealing with this economy, its debt, it's deficit, spending priorities and all of that is not going to get done in the next five weeks. so let's be honest about that. i agree with you. i think that they're going to come to a short-term stopgap solution that deals with the cliff, that deals with the bush tax cuts that expire, that deal with the increase in unemployment rate that's due to hit in january. they'll deal with those short-term things, but the long-term systemic substantive points that need to be addressed will not get addressed in the next four weeks. >> steve, how would you markets respond if they decide we'll have a short-term fix but we haven't actually managed to come up with the real healthy response to what the economy needs? >> you're seeing a total kick the can. we really got nothing done this december, tough luck, we just

want to extend it six months, i think the markets would be jittery but would probably accept it. going over the cliff -- and we were talking about this the other night in washington with a bunch of ceos," going over the cliff is totally uncharted water. we have never seen anything like that. and how the markets react, how companies react, and remember one other thing, we have another one of those fun debt ceiling discussions coming right behind this. >> right. >> and so -- >> oh, it's all exciting in washington. >> if we don't wrap this up, we go right into that. >> then we really start having fun. >> katty, politically you have two intractable positions core to both sides. one from the president is the wealthy need to pay their fair share. on the other side, republicans core to their belief is that we do not raise taxes at this moment in time. so if you believe that that's important to the negotiation, who blinks in that scenario? i don't know who it is. >> that's what this election was about, right? >> right. >> it was the big philosophical divide in the country over the role of government.

is government an enabler in which case you feel that there should be higher revenue in order to carry on providing some kind of social safety net, or do you feel as republicans do that that just gets in the way of growth? the moment you raise taxes of any form, that's what is a growth inhibitor which is what republicans are saying. >> republicans have accepted the idea that there's going to be revenue. they're over that. the issue now is where does the revenue come from? quite frankly, if the five of us sat around this table, we could get this deal done pretty quickly. it's not hard to compromise it out. you don't increase the rates as much as obama wants. you do some stuff on deductions and so-called loopholes that the republicans want. you create $1.2 trillion of revenue. you have a trillion dollars of savings from some stuff that happened already last year, do some stuff on defense, you could get the $4 trillion package that we need. it's not hard. you just have two sides that are so polarized, have dug themselves into such deep corners, and just seem unwilling to get out of them. >> it will get done.

remember i told you that. >> from donnie's lips. let's get to some of your charteds here because katty asked you what happens if we do go over the cliff. let's look at some of the real consequences. the uncertainty index is your first one. >> as i said, we don't know what happens, but there's a few indicators that give us a sense as to at least where people, business and the economy is at the moment. one interesting index that i came upon is called the uncertainty index. it's done by several economists where they attempt to incorporate the number of news stories talking about washington policies that are in disarray, tax cut provisions that are expiring, all the kind of indicia of uncertainty. and put it on a graph. and what you can see is that we certainly had 9/11. we had the iraq war. and then it sort of stabilized at this sort of low level until we got into the financial crisis. when we had a high level of uncertainty. and then the famous debt ceiling debate way up here. so we're in this sort of range. and it's an elevated range

compared to where we've been. i believe when businessmen tell me that this is introduced uncertainty into their business, into their ability to hire and make decisions, i believe that as we sit up at the top end of the range and if we go over the cliff, we will go up here somewhere. i believe this is serious. now, what's interesting when you look at the economy, and so actually what's happening in the economy as a result of all this, you can start to see signs within the business community that they are taking this seriously. here's just one graph that i pulled out that shows that business investment spending declined in the last quarter by 1.3%. it's the only -- it's only the second decline, really, since the recovery started. now, i'm not going to blame it all on the fiscal cliff. we have a slowing economy. we have slowing economies around the world. but i was at a dinner with a bunch of ceos in washington who are interested and care about this fiscal issue on monday night. and they were talking about we're not hiring. we're allowing attrition to happen. we're holding back on big

spending. we want to see what happens here before we go forward. what's interesting about this is that the consumer seems to have a different view. the consumer -- for the consumer so far, this has sort of passed by. i wouldn't say blissful ignorance, but it has not affected their behavior. you had a fairly strong set of economic numbers this fall. the housing market seems to have finally turned up after a period of obviously deep decline. and so consumer confidence, which is one of our best proxies for this kind of thing, has been turning up and really does not yet -- the fiscal cliff does not yet seem to have penetrated their consciousness. for those of us who were in stores over the holiday weekend, stores are crowded, people are buying, but it's only a matter of time. >> it's not an easily graspable news story, it's not a sexy story. >> housing, employment has upticked a little bit. >> the numbers will probably be okay. i don't want to sound like one of these, you know, chicken

little people where the sky is always falling, but this is unprecedented territory. we have never gone over a cliff of this sort where $7 trillion over ten years of budget contraction comes, then you face the debt ceiling crisis right after that. remember in the fall of 2008 when congress did not pass t.a.r.p., the stock market went down 700 points. that, to me, is the kind of reaction you could see here if we go over the cliff in a way that i would call disarray, where there's no -- everybody just gives up, goes home, we can't get it done. go over the cliff. then we'll think about it in january. you're going to see some very adverse market reaction and some adverse reaction from business. >> there are democrats who argue that point, that we should go over the cliff. >> yes. >> that we should take that plunge because the shock -- the economic shock to the system that we need. and i don't think we need to do that. i think because my estimation, of course, living in washington and breathing in their air, that

rarefied air so much, you kind of get intoxicated, but the reality is still the reality. and businesses and individuals make these choices. and yet you have some folks out here, as you just showed, consumers are, like, okay, i can still get my iphone, and i can still go on and do the things i do to help this economy churn. businesses have pulled back a little bit, but no one has this sense of, you know, understanding and appreciating exactly what happens. >> my rue is that going over the cliff is only the second worst outcome from this mess. the worst outcome from this mess would be just to purely kick the whole can down the road because we've got to address the long-term deficit problem. we have got to do that, and this is the moment to do it. >> we'll see what happens. by the way, i like the promotion to professor. i like that, professor rattner. >> can we raise our hand if we want to ask a question? >> flute the remainder of the show. coming up, political director chuck todd, former dnc chairman howard dean, "new york times" columnist gail collins and jonathan capehart.

up next, the top stories in the "politico playbook." first, the host of "way too early with bill karins," bill karins with a look at the forecast. hey, bill. >> yeah, one day, willie, one day. it was fun. you left a good show in your wake. good morning, everyone. down here at the plaza, the lights went on last night. the world-famous christmas tree is up and christmas is slowly approaching. yesterday it was very cold in the northeast. that was one of the bigger weather stories. looks like it's still chilly, but the wind not as bad as it was yesterday morning. windchills still in the 20s in most spots. i don't think we have to worry about icy roads. this afternoon just like yesterday with temperatures heading up into the 40s. looks even warmer friday into saturday. so the good news for the east coast, i think your warm-up has begun. anyone traveling to the west coast, this is where all the weather stories are going to be over the next three days. heavy rain, coastal areas of california, oregon, towards washington state. we really could get nailed. this could be one of the bigger rain events of the season or maybe the year for northern california. that little dark area between crescent city and redding is estimated rainfall totals up to six to eight inches.

that's significant stuff. we could have flooding concerns on the rivers in the days ahead. if you're traveling anywhere in the middle of the country, beautiful weather. look how nice that is, denver, kansas city, st. louis, oklahoma city down to texas. florida still one of the warmer spots. still a little cold in areas of the northern plains. overall, it's a lot better than it was. it's a lot warmer, too. you're watching "morning joe," everyone. we'll be back soon. we're brewed by starbucks. of washington about the future of medicare and social security. anncr: but you deserve straight talk about the options on the... table and what they mean for you and your family. ancr: aarp is cutting through all the political spin. because for our 37 million members, only one word counts.

get the facts at earnedasay.org. let's keep medicare... and social security strong for generations to come. bp has paid overthe people of bp twenty-threeitment to the gulf. billion dollars to help those affected and to cover cleanup costs. today, the beaches and gulf are open, and many areas are reporting their best tourism seasons in years. and bp's also committed to america. we support nearly 250,000 jobs and invest more here than anywhere else.

we're working to fuel america for generations to come. our commitment has never been stronger.

♪ try to see things my way welcome back to "morning joe." 6:25. a look at the "morning papers." "the new york times," the obama administration reportedly considering a variety of options to put an end to the violence in syria including sending direct aid and providing surface-to-air missiles to turkey. the decision to send missiles to turkey could come as early as next week according to "the

times." >> "wall street journal," federal reserve likely to keep in place policy decisions made earlier this year in an effort to further boost the economy. in the fed ace latest report, says the economy grew at, quote, measured pace over the past two months, still the central bank hinted that -- i can't see. >> you've got to get those glasses on, donnie. poor guy. >> continuation of purchasing -- >> this is not a vanity moment, donnie. >> put the glasses on. you're not even on camera. oh, they're reading glasses. that was reading. >> that's why i'd never replace brian williams. >> yeah, it's just the glasses, really. "the detroit news," the auto industry has good reason to be optimistic despite the threat of the fiscal cliff. sales numbers expected to hit a four-year high when they're announced next week. auto executives projecting the industry's third consecutive year of growth in 2013. here we go. >> in the parade of papers, "the boston globe," house democrats and republicans came together in

a rare showing of bipartisanship to pay tribute to their own. tip o'neill, they officially renamed a government office building near the capitol in o'neill's honor. >> can you get a little closer, donnie? "the dallas morning news," the environmental protection agency has temporarily suspended bp from new contracts in the united states because of a, quote, lack of business integrity. existing contracts will not be affected. the deep water horizon spill of 2010 resulted in the death of 11 platform workers. and you're done, donny. >> i was literally about to go out and run up to it. >> you can regroup for a minute. joining us now with a look at the "politico playbook," executive editor there, mr. jim vandehei. good morning. >> how you doing, willie? >> doing all right. we were talking about your peer at the top of the show. take us behind the scenes. steve rattner and he's not alone is pessimistic that a deal will get done before the end of the year. >> here's a reason that you might not need to be

pessimistic. there's no doubt that washington has a recent track record of usually botching opportunities to get things done. but if you take aside all the rhetoric, all the huffing and puffing, the people that have been involved in the negotiations over the last six months on this say that you can actually now see what the contours of a deal look like. it's certainly going to take a lot of hand wringing to get there, but it includes a tax hike somewhere north of $1 trillion which is basically the difference between boehner's position and obama's position. it includes medicare cuts, entitlement cuts that are at least $400 billion. remember dick durbin on your show earlier in the week put that $400 billion marker down. democrats privately tell us they'll go higher, perhaps much higher if republicans get serious on raising taxes. they'll cut spending by about $1.2 trillion, which is the total of sequestration. and they'll probably have to throw in a debt limit increase to avoid hitting that in february. people involved in the talks feel like they can get there. there's no doubt it's going to

take some time, boehner has to get republicans more comfortable with raising taxes including raising rates. i don't think there's a scenario where the rates don't go up on people making over $250,000. and democrats have to get more comfortable with entitlement changes. but at the end of the day, obama can deliver democrats. and i think boehner's stronger today than he was three months ago, and he could deliver more republicans than he could of them. >> on that question of taxing the wealthy, you alluded to it in a comprehensive piece that you and mike allen wrote, everybody ought to read it at "politico" today. you say taxes are going up one way or another on people making over $250,000, and not just closing loopholes but on raising that marginal rate. what do republicans get in return for compromising one of their philosophical beliefs that taxes should not be raised? >> the thing that they'll demand, two things. domestic spending cuts and some cuts to medicare. and they're going to have to be north of $400 billion. but remember, even the cuts to medicare that are being talked about don't kick in until between 10 and 20 years from now.

democrats will say that's the paul ryan precedent, that in his medicare plan, the vast majority of all changes take place a decade from now. so republicans are going to have to swallow a tax increase today for medicare cuts on a faraway tomorrow. and as far as what those tax cuts look like, there's going to be a tax rate increase, certainly in the short term. and if you just look at the -- there's an article you can link to our piece today, just look at the top 20 loopholes in deductions. and it shows that it's virtually impossible to close or change any of the most expensive ones. so you're probably going to end up with some kind of total cap on deductions or some sort of alternative minimum tax rate for rich people. so you can jack up the amount of revenue that you're getting for people making over $250,000 or $500,000, whatever the end number is. but again, if you listen to the rhetoric on camera, it sounds like well, there's no way there will be a deal. if you talk to people who have been in the room, they say calm down. it's going to be ugly, but we think we can eventually get

there. >> this is steve rattner, jim. i've been with some of those people who have been in the room, and i don't come away quite as optimistic as you do. the framework you've outlined i think is the sensible one, is the logical set of compromises that everybody's talking about. but then you get past some of those headline numbers, and you say how do you get that 1.2 trillion of revenue, what happens on rates, on deductions? and i don't sense that they've made any real progress toward narrowing that gap. the republicans are still saying we're not going to increase rates even though i think most of us think in the end they'll go up by something. the president's saying he's not compromising even though we assume he'll compromise by something. and then you get into these other cuts, and i think while there's an acceptance of the need to deal with medicare, you've still got to do another $1.5 trillion of discretionary cuts out of defense, out of other domestic programs, out of things democrats -- some of which democrats don't want to cut, some of which republicans don't want to cut. >> right. >> it's pretty ugly.

i'll say one other thing. you know, we went into this, if you think back a few weeks, thinking we were going to have major tax reform. this was going to be an opportunity like 1986 to overhaul the tax code and get rid of all these loopholes. i think that prospect has faded dramatically. we may end up capping deductions as a way to raise revenues or something like that. but the notion of going in and doing a wholesale rewriting of the tax code which would be wonderful just does not seem within the political reach of these groups. >> to that point, i want to ask a question, it would be great of the stalwart of the '80s, ronald reagan, but the reagan tax rates were "x." did he have it wrong? that's what i don't understand. >> you know what? it's not even about what the tax rates are, it's the deal itself. when you're sitting there saying that we're going to accept $1 trillion in tax increases today, whether that's rates, loopholes or whatever it happens to be, for spending cuts 20 years from now, we've been in that room. we've seen that movie. and it doesn't happen. and that's the problem fiscal

conservatives have with negotiating with democrats right now. you want it all from us right now. but you're going to tell me a congress 20 years from now is going to execute on those tax cuts? not happening -- i mean on those spending cuts? it's not going to happen. >> let me toss in on rattner's point about taxes and his pessimism. one of the things you have to watch for is that for republicans to swallow a tax increase, at first they have to say no, no, no, we can't do this, we'll never do this publicly. so boehner has to say that. his negotiators have to say that. but look at grover norquist's rhetoric in the last 24 hours. look at what tom cole said. look at how every day another republican comes out and says well, maybe we could stomach a slight tax rate increase if. those are all the building blocks that it takes to gradually get to a place where republicans can do something that they hate doing. they don't want to raise taxes. but what the president would say is, i don't care what you want. you don't have a choice. the bush tax cuts go away at the

end of the year. i will let them all go away if that's what it takes to get the rate on top earners to go up. boehner knows that. he has a huge incentive to get something out of this deal. and the president has a huge incentive to get a deal because the last thing he wants is an economic funk to start his second term. that would be a bummer for him and a bummer for his policies. >> and if i was advising republicans, i would say you want to get re-elected? you want to be here on your party? look at chris christie. start to move over to the other side of the aisle. >> michael steele, i know you like that position, give it all up. >> that's not what i said. i said reach across. >> jim vandehei, thanks so much. great piece, you and mike allen in "politico." >> take care. when we come back, things getting chippy between the nets and celtics, more than chippy, a fight broke out, spilled over into the front row of the stands. rondo and kris humphries, the man you may know as kim kardashian's ex-husband getting after it in boston.

>> they're all just jealous of him. >> next in sports. music is a universal language. but when i was in an accident... i was worried the health care system spoke a language all its own with unitedhealthcare, i got help that fit my life. information on my phone. connection to doctors who get where i'm from. and tools to estimate what my care may cost. so i never missed a beat.

we're more than 78,000 people looking out for more than 70 million americans. that's health in numbers. unitedhealthcare. very sore looking kinda blistery. it was like a red rash... like somebody had set a bag of hot charcoal on my neck. i was a firefighter for 24 years. but, i have never encountered such a burning sensation until i had the shingles. i remember it well. i was in the back yard doing yard work. i had this irritation going on in my lower neck. i changed shirts because i thought there was something in the collar of the shirt irritating my neck. and i couldn't figure out what was going on. i had no idea it came from chickenpox. i always thought shingles was associated with people... a lot older than myself. i can tell you from experience, it is bad. it's something you never want to encounter.

for more of the inside story, visit shinglesinfo.com with his wife, danielle, almost every weekend. derrell hasn't been able to visit his mom back east in a long time. [ shirley ] things are sometimes a little tight around the house. i wasn't able to go to the wedding. [ emily jo ] since derrell couldn't get home, we decided to bring home to him and then just gave him a little bit of help finding his way. ♪ [ laughs ] [ applause ] i love you. i love you, too.

welcome back to "morning joe." 6:38 in the morning here on the east coast. some sports now. the celtics welcomed the brooklyn nets into the proud tradition of boston/new york sports brawls last night.

late in the second quarter, garnett fouled hard by kris humphries and rajon rondo comes up and straight jacks humphries up, pushing him back into the crowd. humphries once married to kim kardashian, as you may know. >> that's what it's about. >> both teams start pushing and shoving. no fans injured, thank goodness. rondo, humphries and the nets' gerald wallace all ejected. expect heavy fines, some suspensions, perhaps. rondo's streak of 37 games with double-digit assists snapped because of his ejection. you can bet he'll be in some trouble with the league. ne nets won, they're tied with the knicks. 10-4 now. after the game celtics' head coach doc rivers frustrated with his own team. >> if i'm brooklyn and the league, you've got to think we're pretty soft the way we're playing. we're a soft team right now. we have no toughness. i mean, that stuff's not toughness. >> after the fight, kris humphries went to twitter to solicit a little medical advice,

posting this picture. you see the scratches up and down his arm and back, saying, quote, anyone know where i can get a quick tetanus shot in boston? >> ouch. >> with the nets' win, they improve to 10-4, the celtics drop to 8-7. a couple of top five teams playing in college basketball, number two duke hosting fourth ranked ohio state. second half, duke on the break. plumly, one-handed throwdown there. later in the half, the blue devils get the steal and push it ahead to freshman rasheed suleiman. he goes to the rim for the finish. duke comes back with a double-digits deficit to win 73-68. that is their third win over a top five team this season. and we're not even into december yet. college football now, as predicted here yesterday, lsu's les miles ended the speculation that he'd be the coach at arkansas by agreeing to a seven-year contract that will keep him at lsu through 2019. we call this, my friends, a leverage play. float the arkansas story out, make yourself a lot of money. "the washington post" reporting

the new deal will pay miles in the range of $4.3 million a year. an increase of over $500,000 from what he made this season. miles's extension from lsu still falls short of the five-year, $27.5 million deal he reportedly was offered by arkansas, but his agreement with the tigers still makes him the fourth highest paid coach in college football behind only nick saban, mack brown at texas and bob stoops at oklahoma. miles has a record 85-20 in his 8 seasons with lsu. and one final plea, if you're with the gator bowl and you're watching this right now, invite vanderbilt to the game. we all want to go. everyone who ever went to vanderbilt will come to jacksonville, florida, to root on the team in this game. on the gator bowl. >> with joe not being here, aren't we tired of alabama being in the championship game? >> they'll be there again, my friend. >> and take a whooping. >> that means you're tired of them winning. >> we will not go over the fiscal cliff, and notre dame will beat alabama.

i can't wait for joe to get here to put it in his mug ahead of time. the science of e-mail fund-raising. how the obama campaign mastered the art of asking for money over and over again. bloomberg businessweek's josh green joins us next with an exclusive first look at his new piece on "morning joe."

beautiful picture of the sun coming up over washington. joining us now from d.c., senior national correspondent for "businessweek," josh green looks at the science behind the obama campaign's very successful e-mail blasts. maybe you even saw them. josh writes in part, "one fascination in a presidential race mostly bereft of intrigue

was the strange, incessant and weirdly overfamiliar e-mails that emanated from the obama campaign. anyone who shared an address with the campaign soon started receiving messages from barack obama with subject lines like "join me for dinner?" or "it's officially over," "it doesn't have to be this way," or just "wow." jon stewart mocked them on the daily show, the hairpin likened them to notes from a stalker, but they worked. most of the $690 million obama raised online came from fund-raising e-mails." josh, good to see you, man. >> good to be with you guys. >> take us inside this. they were sort of strange because it was the sort of e-mail that you would open because it looked personal, it might be addressed to you in some way. >> yeah, i think this was the bigger, more underappreciated stories of the campaign. super pacs got all the attention this cycle, but the obama campaign itself actually raised ten times as much money online as the biggest democratic super. ac, and most of that money came from these e-mails. so we got the campaign to open

up the black box and take us inside the science of devising and writing these e-mails 37 what they were based on was testing. they would test as many as 18 different variants of every e-mail. and what they found was that sort of creepy overfamiliar tone that everybody talked about was actually the most effective. and oddly enough, mild profanity was effective, too. saying things like, "hell, yeah, i like obamacare," would bring in millions more dollars than some of the other options. and so that's why everybody's e-mail inbox was filling up with these kind of strange messages from the president. >> katty? >> josh, it's katty kay here. in this world where we know everythi everything about everybody, who was it responding to these e-mails to something like "hell yeah like obamacare." is it kids? big donors? it sounds like it's pitched more at a younger donor. >> that's a great question. i asked them, did you send different messages to different

age groups or gender? and the answer turned out to be no. this was really almost more an art than a science. in that when you hit upon an effective subject line, it tended to perform better among all age groups, all genders and all categories than anything else. and it was strange not just to me but to the people who wrote these e-mails themselves. which ones wound up being the most effective. and the most effective subject line over the course of the campaign was just "hey." just the word "hey." >> campaign fund-raising. >> josh, to your point, it's actually art and not science, as somebody who's done messaging the last 30 year, common sense tells you an e-mail that's sent out in a traditional kind of t antiseptic way with colloquialisms, that's friendly, common sense tells you duh. there's no surprise there with everything we've learned over the years in advertising. >> what's interesting is the romney campaign didn't do it. >> i was about to say, josh, how did that compare with the

beached whale of the rnc and the romney campaign officially known as orca? you know, give me some sense here that we had a clue, but i guess not, right? >> well, no. i mean, i think we're talking about two different things here. the obama campaign in general when it came to technology was years more advanced, i'm afraid, than anything the rnc or romney did. maybe that has something to do with your departure, michael. >> i would think so. we can have that conversation, too. >> the obama campaign, not only did they have a staff of 20 people writing just these e-mails, they were sort of monkeys chained to typewriters or computers, i guess. they also had an entire digital analytics team that would run controlled a.b. testing of each of these different e-mails. they would find the one that worked, and then they would blast that out to their e-mail list of tens of millions of supporters who dutifully would chip in more and more money. i think that was really one of the reasons how the obama campaign was able to match romney's impressive fund-raising

over the course of the campaign. >> but i would submit to you that it's not just about the fund-raising. and this, i think, is ultimately what was missed by a lot of folks at the rnc is that person who gave $20 in responding to that e-mail also became a volunteer. and so they had this uncanny ability to sort of morph their donors into action -- >> what they did was they didn't just use social media, they engaged in it. >> they engaged it. >> they deputized people and they followed the voters that voted for obama four years earlier, who their best friends were, how to talk to them. this was a microcosm of how any marketer, whether you're selling diapers or anything else, needs to engage with a consumer. the days of the 30-second commercials as the main driver are over. >> right. josh, just going back to the republican side for a second, i read somewhere or another that one of the issues for republicans is they may not even have access to a pool of talented young geeks, software people, whatever you want to call them, to match the democratic effort, just given

the politics in silicon valley and things like that. do you have a sense as to what the ability of the republicans is going to be to catch up on these kinds of things? >> great question. >> well, that is a great question. i think now in hindsight, republicans realize that they're at a serious deficit when it comes to technology and this kind of e-mail testing. one of the big differences in the campaigns was that obama decided to build this team in house whereas republicans and romney outsourced it to the traditional political vendors who do this sort of thing for campaigns. who are frankly we can now see a generation or so behind where the democrats are. and so what i wanted to do was sort of take a look at the science behind this sort of thing and what it was that they had done that worked. i'm sure that's something that republicans are going to be looking at, too. >> it's a fascinating point that the demographic makeup of the people that are driving technology by nature are going to be democrats. >> we had them at the rnc when i was chairman. they are there. you just have to go out and get them and bring them in. they didn't. >> i want to know what the michael steele "hell yeah i love

obamacare" equivalent is. i think that should come up. we'll give you a break to think about it, michael, we'll put you back in charge. >> as donny deutsch can tell you, the casual hey subject line, it's the same one certain adult websites use to lure you in. >> i think i know that one. and then you click. the next thing you though -- >> free blue pills. >> based on your use of adult websites, what should be the way in? >> free blue pills. >> there you go. donny goes down a rabbit hole every night. great piece. interesting. good to see you. >> thanks. >> it's in the new issue of "bloomberg businessweek." still ahead, nbc political news director chuck todd. more "morning joe" in a moment. [ male announcer ] introducing the new dell xps 12. part of a whole new line of tablets from dell. it's changing the conversation. ♪

it's changing the conversation. if we want to improve our schools... ... what should we invest in? maybe new buildings? what about updated equipment? they can help, but recent research shows... ... nothing transforms schools like investing in advanced teacher education. let's build a strong foundation. let's invest in our teachers so they can inspire our students. let's solve this.

cool, you found it. wow. nice place. yeah. [ chuckles ] the family thinks i'm out shipping these. smooth move. you used priority mail flat-rate boxes. if it fits, it ships for a low, flat rate. paid for postage online and arranged a free pickup.

and i'm gonna track them online, too. nice. between those boxes and this place, i'm totally staying sane this year. do i smell snickerdoodles? maybe. [ timer dings ] gotta go. [ male announcer ] priority mail flat rate boxes. online pricing starts at $5.15. only from the postal service.

when we come back on "morning joe," former dnc chair howard dean joins us right here on set. keep it on "morning joe." ally bank. why they have a raise your rate cd. tonight our guest, thomas sargent. nobel laureate in economics, and one of the most cited economists in the world. professor sargent, can you tell me what cd rates will be in two years? no.

if he can't, no one can. that's why ally has a raise your rate cd. ally bank. your money needs an ally. i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses.

the rest is up to you. call and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement plans, it could save you thousands in out-of-pocket costs. call now to request your free decision guide. i've been with my doctor for 12 years. now i know i'll be able to stick with him. you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks, and you never need a referral. see why millions of people have already enrolled in the only medicare supplement insurance plans endorsed by aarp. don't wait. call now.

share "not even close." share "you owe me..." share "just right." the share everything plan. shareable data across 10 devices with unlimited talk and text. get a droid incredible 4g lte by htc for $49.99.

i wouldn't even care about winning the $550 million. i just want to be paid with one of those giant checks. wouldn't that be great? take it to the bank, try to feed it into the atm. >> i know that lotto money is going to be mine. even though the drawing hasn't happened yet, even though the odds of winning are 175 million to 1, because i bought 175 million tickets. and i'm guaranteed to win because every single one of these babies has the exact same lucky numbers. all right? so it's in the bank. i am mega rich! no more slaving away for the man 30 minutes a day, four days a week.

>> welcome back to "morning joe." i'm joe scarborough here in boston this morning. with us still on set in new york, we've got donny deutsch, steve rattner, michael steele and katty kay. and joining the table, former governor of vermont and former chairman of the democratic national committee, howard dean. howard, you just look where the democrats are sitting right now, and you think about what a long, long way this party is from where it was when you took over. and you told everybody you needed to adopt a 50-state strategy. people thought you were crazy. now you're hearing top republican leaders saying we need to do what howard dean when his own party thought he was crazy and adopt a 50-state strategy. so now that democrats are where you dreamed they would be when you started that 50-state strategy, do they go for the deal, or do they go to make republicans sweat? >> they've got to make some sort

of a deal, but the deal has to be the right deal. and i still believe that it's safer, if you're on the progressive end of the political spectrum, to go over the fiscal cliff than it is to agree to some of the things they are talking about. raising the medicare age is a complete -- it's a ridiculous policy. here we have a universal health care policy that works with low administrative costs to take people off medicare by making the eligibility age 67 is just stupid. is bad policy. so that's the kind of stuff you've got to watch out for. i personally think you'll get a lot more deficit reduction if we do the fiscal cliff. i actually think the markets will reward the fiscal cliff over a period. there will be some panic and some moaning and groaning, but i think -- first of all, the fiscal cliff's not a real cliff. it's a slope. and you're going to get the biggest bang for the buck in terms of deficit reduction, and i do believe it's time to be a deficit hawk. i really do. i think the economy can stand it. yes, we will go into two quarters of recession, and i believe that, but we're in deep trouble here. somebody's going to have to pay

the bill, and i think it's going to be all of us. you go back to bill clinton's tax rates which we did pretty well under bill clinton, you cut some defense spending, which isn't going to get cut otherwise because the defense contractors are in practically every congressional district in the place. and you do make some human services cuts which i don't like but everybody's going to have to put something on the table here. >> steve rattner, i'm sure you would beg to differ with what howard dean had to say as far as the fiscal cliff goes. he says it's not a fiscal cliff, it's more like a fiscal slope. there are some people that occupy the left side of the american political spectrum that would agree with howard dean saying listen, it's really not that big of a deal as deficit hawks are making it out to be. you would disagree, i would guess. >> well, i think howard is disagreeing a little bit, too. i think howard is saying it's time for meaningful deficit reduction. howard's become a deficit hawk. i think howard and i would disagree probably on some of the elements of what constitutes -- >> no, but he's saying it's not a disaster if it happens. >> well, i was going to get to that point.

the fiscal cliff itself, howard is right, it's a slope. on day one the economy does not collapse and go into recession. but i worry a lot about the markets. the market reaction to going over the cliff, particularly if we go over the cliff in disarray where there's really no plan. everything's broken down. nobody knows where anybody is. i think that could be pretty ugly in the markets. having said that, my own view is, that going over the fiscal cliff is only the second worst thing that can happen. the worst thing that can happen would be for congress to simply kick the can down the road on everything. >> that's exactly right. >> extend all the taxes, extend all the spending, let life go merrily on the way it is. we cannot let that happen. it is time to address the deficit. and if going over the cliff is a necessary tool, because i think it will be a tool because i think markets will react adversely, force people back to the table, and then you get a bunch of compromises, some of which you won't like, howard, some of which i won't like. >> i disagree. i do think going over the cliff would be a disaster.

in this 24/7 media cycle, it would get so heightened that whatever the reality is going the cliff will be so, so overblown that what we saw earlier in your charge as far as consumer confidence will be affected. and i think we go into a whole very fast, very deep. so i don't just cavalierly say we go over it, we need that medicine. i think in this new cycle we live in now. >> what is it going to be that forces the people in washington to act like grown-ups? maybe it takes something from the outside to actually force people to come to some sort of resolution and make the compromises that are necessary. >> you know, michael steele, i hear howard dean say with passion that raising the retirement age is stupid, i would say it's not stupid. >> not the retirement age. the eligibility for medicare. i have no problem with raising the retirement age to social security. >> yeah, but you're effectively raising the retirement age once you raise the age on medicare because people can't get health care. they've got to keep working.

>> so michael steele, i think that's inevitable over time even for medicare. >> yep. >> in an age where we're growing -- you know, living much, much longer. but howard dean obviously has problems with that. you and i would guess have real problems with raising tax rates to 39%. i think that's stupid. that said, how does barack obama get the nancy pelosis of his party? how does john boehner get the joe scarboroughs of his party to move from these positions that they have held for 20 years? to make a deal? this is a brave new world. i mean, it's hard for me to actually envision, as we get closer to it, that there are actually going to be republicans in the house of representatives that are going to have to run for re-election, saying something they haven't had to say for a generation. i voted to raise taxes, and here's why. how do they do it? >> i don't know how they do it,

to be quite honest. i'll tell you what the nub of the problem is, and it goes to what we talked about a little bit earlier. you have the president saying, i want tax rates to go up now on the promise that a future congress is going to cut the spending that you want done 20 years from now. and that's just a bargain that's hard for a lot of fiscal conservatives to swallow because that has been, as you know, joe, going back to certainly your time in congress, the deal that's always been bargained that's never been fulfilled. and so i don't know how john boehner negotiates and navigates that particular sticking point without some agreement and certainty from this administration that they're going to make those cuts in spending today, not 20 years from now commensurate with the tax rate increases that the president wants. >> joe, i want -- >> that's the only reason we'd go over the cliff. >> i'm going to reference your good buddy, chris christie. i believe the electorate has changed. and i believe if i was advising

a republican, i think it's a running -- it is a tool to say you mow what? this is a new world. and i'm a different kind of republican. and everybody had to put some skin in the game. so to your point, you have often said when you're honest with the electorate, when you talk directly, they get it. so i don't know why that is so taboo to a republican re-running for office. >> what, raising taxes? >> just saying, look, i was somebody who said something's got to give here. everybody's got to come to the table, and i had no problem raising the marginal rate 3.5 points for wealthy people. >> you can make that argument, donny, when you have something to show that actually addresses the spending issues that have not been addressed. >> i'm saying how do you move to the other side? no republican is going to move. >> hold on a second. and michael steele really underlined the big problem, donny, and let me ask you, howard dean, if you can do it -- and i think you can because you know, howard, i have faith in you. i have faith in you.

>> thank you very much. >> i want you to put on your leadership cap because when you're up in vermont, you worked with republicans and democrats alike. you were always a deficit hawk up there. how do you convince me and the republican caucus to raise taxes which i find offensive, but i will do it because we need to all come together and make this deal. how do you convince me to raise taxes today for spending cuts that you claim are going to be coming 20 years from now? if you're john boehner, what's your message? >> you don't do that. that's why i think the cliff is not a bad solution. you can't do that. michael's right. i agree with michael steele. you cannot promise we're going to raise taxes and yeah, don't worry, we'll cut the expenses later. it can't happen. the reason it doesn't happen is not just because the democrats won't do it. the republicans won't do it. how did we get in this mess? 60% of the deficit projected in 2019 is because of the bush tax cuts were never paid for by cuts. nobody wants to cut stuff. not republicans or democrats

when they really get right down do-to- to it, that's the problem. i agree with michael. this has to be a comprehensive plan now intoing entitlement cuts. the truth is the president's health care bill is not very strong in taking care of older people. they are not going to be able to go out in the insurance market and get health insurance between 65 and 67 because the bill that was passed and signed by the president says that the insurance companies can charge three times more for old people than they do for young people. this is a ridiculous idea. that doesn't mean we can't take some cuts out of medicare. but it does mean you can't raise the eligibility age. >> so look. first of all, the problem of backloading the cuts in medicare can be solved. there are ways to cut medicare that involve changing the costs of the benefit annual adjustment, means testing medicare. there's a bunch of stuff you can do to medicare. >> and mostly capping payments. >> that would be the holy grail. but there's a bunch of stuff you can do in the short run that will save some money. we can take the fight outside about whether you raise the

eligibility age for medicare or not. that is where a lot of the big money is at if you're going to raise the retirement age for social security, it does kind of make sense to do it for medicare. fundamentally, michael, i take your point that the republicans rn are not going to give on taxes without seeing spending here where we can smell, touch and feel it, but you can do that. there are proposals out there to address medicare, to address social security, to address discretionary spending that would give republicans as much confidence as democrats get on taxes that it's all a package. >> i see your point, and i agree with that. and you actually have members right now in the house coming out slowly but certainly in the senate talking the way you're talking and saying look, why don't we give the president the easy stuff we can give him? we agree to a, b and c. it's d through z that we now need to worry about the next four to five weeks. and that's where this whole argument begins to break down because to the governor's point, the fact of the matter is, you cut a deal in which you want it all right now. and this is what the health care

do deal was. look what we did with health care. we're going to frontload the cost of spending on health care now for the program to come in two years, three years from now. that's not how you negotiate the kind of bargain on spending cuts and tax rate increases with this particular congress. it's not going to happen. >> i mean, i agree. you can't say to republicans, right, as democrats, we want our ice cream now, and we'll have our spinach, you though -- >> tomorrow. >> -- a long time after the meal is finished because they say we've seen it too many times before. we've given you the tax hikes and we just haven't seen the spending cuts that follow. but i think the democrats have a point, too, in which the white house is saying to republicans, we can't hold off on taxes just because you want the whole enchilada. you want to be able to have the whole package of tax reform. you and i were talking about this earlier. they're going to have to do something on that, too. and you've still got republicans in the house saying to boehner well, unless we can get the whole tax reform package now, we're actually not going to do anything.

>> that's why i think we're going over the cliff. i don't think the republican votes are there. >> i agree. >> boehner is in the trickiest position in washington in the moment. >> absolutely. >> he is the man with the toughest job in washington because in the end pelosi's going to get the democrats. they'll do it for her. >> so michael steele, let me put you in the hot seat now. we talked about howard for a second ago. let's talk about tax increases. and let's talk about where the republican party goes from here. >> yep. >> the republican party has been accused of being the party of the rich, of protecting tax cuts for the rich. of course, i could channel howard here and say both parties have done a pretty damn good job since bill clinton was president, taking care of the rich first with a lot of legislation. and they have. >> very true. >> the tax code is an absolute joke. so does the republican party step up and redefine itself as a party that's not just about protecting the rich and saying listen, you know, we voted to cut capital gains tax, you know,

down to 15%. >> right. >> and i was one of those guys, i wanted to cut capital gains -- capital gains tax. i thought it would create investment. i thought it would create job growth. and it certainly did over time. but here we are in 2012, and you've got the richest of the rich paying 14%, 15% in taxes because of the capital gains tax. and you even have me going, okay, so what is wrong with the party that believes in free enterprise, that believes in fair play, that believes in working-class americans being able to work hard and start their own businesses? and create their own new jobs and hire their own people? what's wrong with raising the capital gains tax from 15% to 20%? what's wrong with warren buffett's idea of having a minimum tax for the super rich of 30%? so people making the type of money warren buffett makes, the

type of money that mitt romney makes, the type of money that bill gates makes. those people aren't paying 14% taxes when the rest of americans are carrying the full load. >> i think to your point about the party on this issue, absolutely. i think the party has a window now to come to the table in an honest way to be, again, the party of the middle class. more importantly, joe, to be the party of the poor, to make the argument of elevating people out of poverty into ownership through our tax system, through our, you know, our spending decisions. but more importantly, with respect to those top earners out there, letting them know, look, we've got your back. we're your friend. we're not going to gouge you. we're not going to, you know, do like democrats want to do and nonize and demagogue against you, right, howard? right? what we do want is and have is an expectation that you will work with us to help lift everybody's boat. and i think that's a very fair argument to make.

this fiscal cliff argument right now that we're facing is a good opportunity to begin that conversation. you're already seeing it, joe, with some republicans out there, bill kristol and others saying oh, yeah, i guess we can begin to look at putting that top rate higher for those higher income earners simply to begin to make the argument to the middle class and the poor that we stand more with them than with those at the other end of the spectrum. >> so steve rattner, explain the math to me because i'm not a big fan of raising the top rate to 39.6%. in fact, i hate that idea for, you know, small business owners that make $250,000, $300,000, $350,000. explain the math about the difference between going after the millionaires, raising the capital gains rate a little bit, getting rid of this carried interest exception. exemption. all these things that you've been talking about. what is the math of it? can we get to $1.2 trillion

without raising that top marginal rate that i think catches the small business owner more than the billionaire? >> the math is a little tough to get there. it's not impossible. it's a little bit tough. things like the carried interest, which i think we all agree makes no sense, it's only about a $13 billion item over ten years. it's more symbolic than it is real. making the billionaires pay a minimum of 30% tax, again, you're going to get some revenue from it. it's not huge. the biggest piece of revenue apart from raising the rates would come from limiting deductions, would be basically to say to people either you only get a 28% deduction, even though you're in a higher tax bracket, or saying you have a limit of $17,000, $25,000, 50,0$50,000, numbers that have been thrown out in terms of total du deductions. using those tools, you can get to $1.2 trillion.

the problem is there would be leakage out of the top 2%. in other words, limiting duk deductions would also leak down closer to the middle class, and i don't think any of us want to do that. >> so let me ask you this, steve. what about warren buffett's idea of the 30% minimum tax? because obviously, if you're worth hundreds of millions of dollars, you're going to have the best accountants and tax lawyers. what if you have just a flat 30% tax rate for millionaires and billionaires? is that -- is that a way forward? >> it's absolutely a way forward. and i think it should be part of any proposal. >> wait. and i said flat. i'm sorry, let me correct myself. i mean a minimum. we're talking about a minimum tax. if you make a million or more, it doesn't matter how you made it. you're going to be paying 30% to the government. >> and that is, in my mind, an absolutely important part of a proposal. it is about a $100 billion item

plus or minus depending on what you're comparing it to. it makes a meaningful contribution to the $1.2 trillion we need, but you've got to do a lot of other stuff to still get there. >> to buffett's point, howard, the capital gains argument -- i said this in the earlier hour -- that somehow, by raising it from 15% to 28% in any way diminishes investment, i told a very personal story. i sold my business when it was 28%, and i have not spent $1 more or less in business or personally had i paid 15%. it is a moron's argument. >> actually, your case is backed by a number of studies which show that, in fact, tax rates have very little to do with investment. if you go up to 70%, yeah, you're starting to see serious stuff. >> french style. >> yeah, that has something to do with investments. >> but we're a long way off. >> what we're talking about, it's a relatively minor adjustment from 35% to 39.6%. >> i'm talking about the capital gains. steve's going to argue with this. >> no. >> here's the problem with

capital gains. the capital gains tax is a blunt instrument. i don't mind preferential treatment for capital gains because if you invest and create jobs, that's a good thing, and we need that. the problem is that the big banks, for example, invest in things like credit default swaps pushing all this money around, it's like the carried interest. carried interest for real estate makes sense, but carried interest for a lot of other things doesn't. so the problem is, the republicans are right. we really do need a tax overhaul. >> we do. >> to get rid of some of this. >> yep. >> this big-scale stuff that's been done that's been much too wide than anything we really needed to fix. >> we've got to go to break, but really quickly, what would your argument be to anybody that would suggest -- an economist that would suggest that raising the capital gains rate from 15% to 28% would be a drag on the economy? >> my argument would simply be we had a 28% capital gains rate in the first clinton term. we certainly had higher rates before that, as high as 39.6%. and as warren buffett has been

saying eloquently as he's gone around including here on the talk show circuit with his new book, i've been on wall street 30 years. i've seen capital gains rates high and low. they've never affected my behavior one iota in terms of whether i invested. as buffett said, if somebody called you up and said i have the greatest investment in the world, what's the tax rate? no, you're not going to say, what is the tax rate. >> maybe they should. >> thank you so much. howard, thank you for being with us. really appreciate your insights this morning. coming up next, we'll be bringing in nbc news political director, chuck todd. also, "the washington post's" jonathan capehart will be here as well as the ceo of deloitte joe etchevarria. you're watching "morning joe" brewed by starbucks. at optionsxpress we're all about options trading.

we create easy-to-use, powerful trading tools for all. look at these streaming charts! they're totally customizable and they let you visualize what might happen next. that's genius! we knew you needed a platform that could really help you elevate your trading. so we built it. chances of making this? it's a lot easier to find out if a trade is potentially profitable. just use our trade & probability calculator and there it is. for all the reasons you trade options - from income to risk management to diversification - you'll have the tools to get it done. strategies. chains. positions. we put 'em all on one screen! could we make placing a trade any easier? mmmm...could we? around here, options are everything. yes mom, i'll place a long call to you tomorrow.

i promise. open an account today and get a free 13-month eibd™ subscription when you call 1-888-280-0159 now. optionsxpress by charles schwab.

there is no reason why taxes on middle-class families should go up. it would be bad for the economy. it would be bad for those families. in fact, it would be bad for the world economy. and so i think it's very important that we get that resolved, and i am very open to a fair and balanced approach to reduce our deficit and provide the kind of certainty that businesses and consumers need so that we can keep this recovery going. >> welcome back to "morning joe" as you take a live look at the white house this morning. with us live from the white house, we've got nbc news chief white house correspondent and political director and host of "the daily rundown," chuck todd. and on set in new york, pulitzer prize-winning historian of "the washington post," jonathan capehart and joe echevarria who was with president obama at the white house.

we still have donny deutsch and katty kay with us. chuck todd, let's go to you first. does it appear, through all of the bobbing and weaving and the tap dancing that the outlines of a deal may be coming together behind the scenes? we're hearing $1.2 trillion in tax revenue. >> reporter: yeah. >> we're hearing $400 billion in medicare cuts. is this a false spring? >> reporter: i think we're a little ways away from the, quote, deal coming together. geithner today, tim geithner, who's leading negotiations, he's headed to the hill. he's got one-on-one meetings with all four players including boehner. but one on ones. not the four of them together, mcconnell, reid, pelosi, boehner. you know, this is still a game of no matter at the end of the day, this is still a game of 218. i saw the "politico" report. the number on the spending side is just lower than everything you hear.

and that all depends, you know, what they describe, that's a reality that gets somehow got 150 house democrats and convinced john boehner to go to the floor with only 80 house republicans. >> chuck, what's the number you're talking about in the "politico" report that you say is a little low? >> reporter: the overall cuts, the medicare number of $400 billion. it would be a surprise because $400 billion is already what dick durbin's talking about. that's the number that's out there. that number felt a little bit low from what i've heard. look, that's the -- that's what's going on right now, right? is that each side is preparing its base to eat its vegetables. so the democrats are trying to get the base to be prepared for a haircut on medicare that's 4, 5, maybe $600 billion. and boehner who, by the way, the best thing to happen to john boehner yesterday was tom cole because for the first time boehner gets to be the middle ground in the house republican

conference, right? he's got the guys to his right who want him to do nothing. but now he's finally got people on his left. that hadn't existed before. the boehner folks won't publicly admit it at all, but yesterday was a good day for john boehner to cut a deal that perhaps will be a deal that doesn't have him having to go to the floor with a majority of the majority, joe. >> i absolutely love the posing and the positioning as both sides are playing for the base of their own parties. i'm wondering if john boehner and barack obama got together, had their short conversation and say hey, why don't we characterize this as a curt, short, curt conversation. that will help you with your people. that will help -- didn't you love that? you know, we hear they talked, and they had a curt conversation. >> reporter: yeah. there is truth to that. >> exactly what both sides wanted to hear. >> reporter: no, there is truth

to that. look, the white house is well aware that they can't -- you know, the one reason why there's not meetings here? that's bad for boehner. boehner can't be seen here on, quote, enemy territory cutting the deal. right? it has -- i mean, look. the semantics matter. you hate to admit that it does, but it does. and the settings matter. that's why you're not seeing a lot of meetings here. >> it does and there are a lot of republicans -- remember newt gingrich going over to the white house through the budget negotiations in the 1990s, and newt gingrich's own words getting his pockets picked by bill clinton. outnegotiated time and time again. so these things do matter when you come back to the hill and you have to go downstairs into hc-5 and sit in the basement and explain what happened at the other side of pennsylvania avenue. let's bring in joe echevarria. joe, you have been good friends with the president. we've seen you over at the white house before at some small business roundtables. well, yesterday you went back

in. and apparently corporations were invited on an alphabetical basis because we had coca-cola, qat caterpill caterpillar, and deloitte. how did "a" through "f" corporations, how did the president do? obviously, you know, he's had a real problem with ceos and not just republican ceos. a lot of people that supported him four years ago. was the tone better in the room this time? >> yeah, i would say it definitely was better. it was constructive. it was reassuring. and i think he was embracing the views that were different. around the table from all sectors in the business community. so i would view it as very positive from that standpoint, joe. >> what did the president tell you? >> well, in essence, he said what he said in the public. he talked about his plan. he recognized that an element of his plan as tax revenue and increases there, and he can talk about what that meant. but he also recognized that

there needed to be entitlement reform and spending cuts. so it wasn't going to be one way to get to the solution. that was what was positive. >> did anybody ask you -- >> joe, you're a -- >> two questions. anybody ask -- yes. >> hey, prez, is this going to get done? >> not in those words, but yes. not the prez part, but mr. president, is this going to get done? he said it would if there was people willing to move on both sides. >> duh. >> that's what he said. and he was honest about that. from that standpoint. >> joe, we've talked a good bit before offset. you're a fairly conservative guy economically. do you think the president understands what needs to be done to not only take care of the fiscal cliff but also take care of the concerns of the job creators, you know, make sure that the economy not only -- not only that we move towards a more balanced approach towards solving the debt but also that we grow the economy? did he seem to get that yesterday? >> yeah, i think without a

doubt, he understood that the fiscal cliff issue was just short term in nature. it's something that needed to get moved on. but the bigger issue was still tax reform for business, making sure that businesses could be globally competitive, dealing with the immigration issues and s.t.e.m. and moving on with regulation because ultimately he did ak knowledge that it is the business community that creates jobs, and jobs are the path to growth, and growth is the path to more revenue. absolutely. >> let's go to pulitzer prize winner, jonathan capehart. jonathan, i tell you what, pieae is breaking out all over the place, howard dean admitted that we had to cut medicare. michael steele admitted we had to raise taxes. and you admitted that you would give up your entire "time" selection if you could just be in the white house today. explain why. >> because at 12:30, president obama will greet former republican nominee mitt romney for lunch today. you remember in his victory speech on november 6th, the president said he looked forward to meeting with mitt romney to

talk about ways they can work together to move things forward on all the problems that the country faces today. he mentioned it again, i believe, at his press conference last week or two weeks ago. and so this is the fulfillment of that promise. now, you know, whether the president, you know, says hey, mitt, i want you to sit on this commission or i want you to send me a briefing book or paper or something on any number of issues, if that happens, i'd be very surprised. but i do think that they would talk about fiscal cliff. they'd talk about tax reform. they'd talk about entitlements because, i mean, say what you will about mitt romney. i mean, he does have some ideas. and you would hope that he would come to the table without the pressure of the campaign, without the pressure of being the republican nominee, but just a businessman, american who thinks that he has some ideas to solve these problems, that he would be honest and truthful with what he would want to offer. but the other thing is, i don't

think, though, what the base would want the president to say to him is what about the 47%? what about this gifts thing you said about me? the president's not going to do that. >> they're not going to talk about any of that. >> not at all. >> i think there's a long history of these kinds of touchy feely meetings and feel good. the idea that romney's going to engage in this budget thing and be helpful, chuck, i'd love to know what you think, but i don't really see that happening. >> reporter: no, that's not going to be the case. i mean, this is something they both feel like they have to do, right? it's the right thing to do for the country. you've got to do these things. it's sort of -- it's the -- frankly, it's the patriot thing to do in these moments. you know what makes this moment a little odder is romney is the first losing presidential nominee not to be back in washington, right? if you look at all the other ones, there always was an easier moment. this was actually a little bit harder to put together simply because romney doesn't live here. not since dukakis in '88 did you

have somebody that had a day job to go back to. romney doesn't have that as well. but i wouldn't be surprised if you see at some point, some job, a commission or something that romney's invited on. don't forget, his political career, he's not going to get involved on that front. but mr. echevarria, i want to ask you a question about whether the president made a line in the sand pledge to you guys that the country will not go over the cliff? did he do that? >> well, no, he didn't make a line in the pledge sand to us. at least i didn't interpret that. what he did say, because he said he wouldn't do a bad deal. >> reporter: right. >> because the cliff is a measure to solve the problem. it just happens to be very austere. he did recognize that the consequences of that, however, would be dire. but more importantly, we'd really miss an opportunity for uplift in the economy. the moment would get passed. so no line in the sand. >> joe, i have a question, all through the year i've been hearing from businesses and

business leaders that one of the things that's stopping them from investing at the moment from hiring and making investments and capital investments is the uncertainty of the economic climate. if we come out of these budget negotiations with more certainty but not necessarily the policies that business would have liked so they are looking at higher taxes, they're looking at obamacare being the law of the land, is all of that investment freed up, or are we suddenly going to see a blossoming of american confidence and business confidence like we're seeing on the consumer confidence side? >> i think what you'd see, certainty is the best stimulus for the business community. >> so we will see investment even if it's higher taxes than we would like? >> yeah, you wouldn't see all of it you didn't like. if there's not some territorial tax issues that aren't resolved, it's not going to be 100%. >> your firm is a business consultant. in your decades of working with wealthy people and taxes, our theory as far as raising the marginal rate and the capital gains would not change one spending habit, one investment

habit for one wealthy american, agree or disagree? >> agree. in the bigger scheme of things and the macro economics, yes. i do think that the issue continues to be, to your point, is balance. and i don't think anybody wakes up in the morning and says i want to pay more income taxes. having said that, as part of a bigger solution, that was the tone of the meeting and that's why i'm optimistic about that conversation. >> you know, donny, i do feel like i need to jump in here because we keep talking about it. you're certainly right if you're talking about warren buffett calling up other investors saying jump in on this, you're right. they're not going to sit and look at the capital gains tax. i will tell you, though, and i know the white house bristles when you say this, i know men and women in pensacola, i know men and women that have small businesses that operate on very tight margins, very, very tight margins. >> absolutely. >> and if you move their tax rate from 35% to 39.6% and add on top of that a new regulation

regarding health care if they have employees that work over 30 hours a week, this is not an ideological argument. hold on. hold on. this is an economic argument, on the margin, these people may not lose their businesses, but they will have to let people go. that's an economic reality that democrats tell me, republicans tell me, obama supporters tell me, romney supporters tell me. if you're running a small business on the margins. these tax increases, these regulatory increases, they do matter in the real world out there. maybe not at coca-cola or comcast or deloitte, but they certainly do on main street. you would agree to that, right, donny? >> based on a half million. there's a huge difference between 250,000 and 500,000. >> donny, and you i agree on that 100%. if i were still in congress, i would say, listen, i will negotiate on anything, but i am not going to raise taxes in this police climate on people making $250,000. you want to talk about $500,000? great.

let's talk about it. $250,000 is a nonstarter for small business owners. in my opinion. hey, chuck, thank you so much for being with us. >> reporter: all right, brother. >> we'll see you on "the daily rundown" right after the show. joe, thank you for being with us, and more importantly, thank you for not calling the president of the united states prez, as donny deutsch suggested you should. >> i was going back to the e-mail thing. very casual. >> i got that. i got that. >> all right. joe, please come back and talk to us soon. we love having you on the show. >> thanks for having me. >> jonathan, stay with us as well. we want to talk about your tie collection. coming up, he's been called the most important man in the middle east, "time" magazine gives us their exclusive interview with egyptian president mohamed morsi. that's straight ahead on "morning joe." i knew it'd be tough on our retirement savings, especially in this economy.

but with three kids, being home more really helped. man: so we went to fidelity. we talked about where we were and what we could do. we changed our plan and did something about our economy. now we know where to go for help if things change again. call or come in today to take control of your personal economy. get free one-on-one help from america's retirement leader.

welcome back to "morning joe." quick weather update to get you door throughout this thursday. the famous christmas tree is now successfully lit. and it's a nice chilly morning along the eastern seaboard. not a lot of active weather today east of the rockies. all that nasty stuff's on the west coast. i want to show you what happened in europe yesterday. a rare event. this tornado was in italy. down by the heel. pretty rare this time of year to

get tornados in italy. you don't usually associate large tornados in this portion of the country to do some significant damage to a steel plant. very impressive. late november tornadoes, even in europe. the west coast is where all our active weather is. yesterday we got nailed by heavy rain to continue. rainfall totals up to six to ten inches. we could see winds gusting as high as 80 miles per hour. this will probably be one of the bigger wind and rain events this rainy season in areas of california. here's how the forecast is looking as we go throughout the next 24 to 36 hours. the cold air is shown in the colored blue and purples. as we head through today, your upcoming weekend into december, things look pretty good. we're not going to see a big shot of cold air. if anything, most people should warm it up. today's forecast, nice and quiet, everyone. it looks like if you're east of the rockies, enjoy a very nice thursday. coming up next on "morning joe," "new york times'" gail collins. ♪

[ male announcer ] it's that time of year again. medicare open enrollment. time to compare plans and costs. you don't have to make changes. but it never hurts to see if you can find better coverage, save money, or both. and check out the preventive benefits you get after the health care law. ♪ open enrollment ends december 7th. so now's the time. visit medicare.gov or call 1-800-medicare. the new wii u and a nintendo 3ds xl. but i got a "christmas sweater and socks" kinda budget. well with our walmart credit card special financing, you can get them all. oh, that'd be a win-win situation! no wait, i win too, so that's like a win-win-win! that is a lot of winning. can't you see my name in christmas lights? super-shopper! i can see it! [ male announcer ] get the season's hottest brands like nintendo 3ds xl and wii u.

make an electronics purchase of $429 or more on your walmart credit card and get no interest if paid in full within 18 months. america's gift headquarters. walmart. ♪ i've been in this town so long that back in the city ♪ with us now, time to bring in one of our favorites, columnist for "the new york times," gail collins. gail, you want to enact a reform in the united states senate that people in my house have been trying to enact for almost half a century. let's talk about it. what is it? >> filibuster reform. everybody's talking about it. >> so you talk about happy talking. do you think it's possible, could it happen this time? >> something, i think, is going to happen. a weeny thing. people think there's a filibuster moment and people say here's the filibuster time, but

there's, like, ten times in the progress of a bill when the minority party can just shut it down if you don't have 60 votes. and i think they'll get rid of a couple of them. i mean, that would be fair, right? down to four, maybe? >> what about the hold process? democrats have done it to republicans in the past. and now we hear that maybe two or three senators that don't like what susan rice did on a sunday show a couple of weeks ago could aeffectively stand in the way of having the president having the secretary of state that he wants out there in the world. is that another reform? >> they don't seem enthusiastic about that. my favorite is jim bunning, the republican from kentucky, once put a hold on a nomination, i think, to the trade commission because he was upset that canada was borrowing chocolate-flavored cigars and importing them. so you can put a hold on for anything. and they seemed to kind of like that. that doesn't seem to be on the top of their priority list. the top is just to be able to get a bill to the floor and have a debate on it without having

the 60-vote thing. >> i think to follow up on joe's point about the susan rice issue and the idea of a hold, what are the political impacts of filibusters in this new environment that we find ourselves in post-election and particularly with respect to the susan rice piece which is -- ha, gender, all these little sexy pieces to it, how do republicans that you're hearing see that? >> it's interesting. i was talking amazingly to more democrats yesterday. they said we just want to have a fight on the floor. we just don't want to have this thing where you can stick something and say i've got a hold on it and nothing happens. we want the american people to have to actually watch. if they don't want susan rice, let them stand on the floor and actually have to talk about it so that the world will see it. and then the people can judge. but it's not like that now. you just stick something in a closet. >> so what's the possibility of

their actually being filibuster reform? this comes up after every election cycle. what's so special about now that makes it possible that the republicans and democrats will come together and do this? >> i think there's so much pressure on harry reid to do something. he can do it by himself with his own party's votes. if he does it, it's really, really, really going to tick off the republicans. they want to protect this partly because they want lots of threats against the democrats so the democrats won't be mean to them and hold up all their amendments. >> you said for them to do this they have to violate their own rules. that's a big problem. in closing, i would also note that even if they do this, we still have divided government because the senate becomes slightly more functional doesn't mean that they're actually going to -- >> six more ways that you can stop things. but it's a little tiny weenie

thing. >> it's a good thing. >> gail collins, thank you so much. we'll be looking forward to your column in "the new york times." we certainly expect the post mortem on the mitt romney-barack obama meeting at the white house. >> can't wait. >> thanks a lot, gail. we'll talk to you soon. "morning joe" will be right back. with the spark cash card from capital one, sven gets great rewards for his small business! how does this thing work? oh, i like it! [ garth ] sven's small business earns 2% cash back on every purchase, every day! woo-hoo!!! so that's ten security gators, right? put them on my spark card! why settle for less? testing hot tar... great businesses deserve great rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with 2% cash back or double miles on every purchase, every day! what's in your wallet? here's your invoice.

i've got a nice long life ahead. big plans. so when i found out medicare doesn't pay all my medical expenses, i looked at my options. then i got a medicare supplement insurance plan. [ male announcer ] if you're eligible for medicare, you may know it only covers about 80% of your part b medical expenses. the rest is up to you. call now and find out about an aarp medicare supplement insurance plan, insured by unitedhealthcare insurance company. like all standardized medicare supplement plans, it helps pick up some of what medicare doesn't pay. and could save you thousands in out-of-pocket costs. to me, relationships matter. i've been with my doctor for 12 years. now i know i'll be able to stick with him. [ male announcer ] with these types of plans, you'll be able to visit any doctor or hospital that accepts medicare patients. plus, there are no networks, and you never need a referral to see a specialist.

so don't wait. call now and request this free decision guide to help you better understand medicare... and which aarp medicare supplement plan might be best for you. there's a wide range to choose from. we love to travel -- and there's so much more to see. so we found a plan that can travel with us. anywhere in the country. [ male announcer ] join the millions of people who have already enrolled in the only medicare supplement insurance plans endorsed by aarp, an organization serving the needs of people 50 and over for generations. remember, all medicare supplement insurance plans help cover what medicare doesn't pay. and could save you thousands a year in out-of-pocket costs. call now to request your free decision guide. and learn more about the kinds of plans that will be here for you now -- and down the road. i have a lifetime of experience. so i know how important that is.

welcome back to "morning joe." last night steve rattner, as i was telling you, we were in boston for the cure event, the coupe epilepsy with david axelrod. i made a bet with david. i lost. he said if i raised a million dollars along with him, mika and the whole team for cure, then he'd cut off his mustache. i agreed though, too, to grow a mustache. i want you to see this picture very quickly. i grew it very quickly. it's orange. i look a bit like geraldo. so now david says he's going to come on our show on december 7th, a day which will live in infamy, and cut his mustache. if you can make a big contribution, i will let you hold the straight razor or bring your personal barber from the hamptons. >> can i hold a straight razor

near your neck or do i have to hold it near axelrod's mustache? >> if you hold it near my neck while he's shaving, you probably don't have to pay him as much to do that. so, yeah, you can do that. >> i think there's a deal to be done here, joe. we'll take it off camera. >> we'll do it off camera. thank you very much. thank you to everybody. donald trump and mark cuban, youssef, our dear friend youssef, a lot of people contributed a lot of money to make this happen. susan axelrod and david axelrod and so many americans impacted by epilepsy, they thank you for your generosity. up next, what happens if we do go over the fiscal cliff? steve rattner has the charts and he's going to explain when "morning joe" continues. [ male announcer ] when this hotel added aflac

to provide a better benefits package... oahhh! [ male announcer ] it made a big splash with the employees. [ duck yelling ] [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. ♪ ha ha! ♪ don't know what i'd do ♪ i'd have nothing to prove ♪ i'd have nothing to lose [ male announcer ] zales is the diamond store. take up to an extra 15 percent off storewide, now through wednesday.

good morning. it's 8:00 here on the east coast. 5:00 a.m. as you wake up out west, and a live look at new york city. back with us onset, donny deutsch, steve rattner, michael steele and katty kay. the big story today, the powerball. $550 million, something like that. did anybody buy tickets? >> yeah. >> you did? >> i did. and i'm still here which means i didn't win. if i had won, out the door. >> you wouldn't have been here at all. one in 175 million chance.

>> it's a loser's game. >> oh, steve! >> steve, what are you saying? loser. willie, didn't you -- >> i did. >> interesting sidebar. i used to do advertising for publisher's clearinghouse. without exception the people that got the $25 million prize, which is still a lot of money, destroyed their lives. they quit their jobs. >> donny, there are a lot of people out there that would like to experience that. >> just give me the moment. >> donny is right. the whole thing of being removed from the people who you've lived with, who are your friends, neighborhood, your community, that amount of money takes you out of that. >> people i don't know who call themselves relatives calling me up saying, hey, can you help a brother out. >> notice how rattner and doich sort of poo-poo the lottery. for them, $500 million. let's get to the fiscal

cliff. politico has an exclusive report that president obama and house speaker boehner had a television conversation. politico characterizes it as, quote, kurt. he wants the white house to move his position on tax rates, but the president won't budge. the president responded to the house speaker according to politico telling him, if he has an alternative plan he ought to put that forward rather than focusing on entitlements. meanwhile the white house will send tim geithner to the white house for meetings with republican and democratic conditioningal leaders. yesterday the president met with big ceo's from goldman sachs, at&t, cater pillar, many who said after the meeting they've merged hoping a deal could be struck to avoid the fiscal cliff. in another meeting president obama said he believes the framework for a deal could be in place before christmas. >> i'll go anywhere and i'll do whatever it takes to get this done. it's too important for washington to screw this up.

now is the time for us to work on what we all agree to which is let's keep middle class taxes low. that's what our economy needs. that's what the american people deserve. >> white house also turning to social media. it has a twitter hash tag to spread its message. >> today i'm asking congress to listen to the people who sent us here to serve. i'm asking americans all across the country to make your voice heard. tell members of congress what a $2,000 tax hike would mean to you. call your members of congress. write them an e-mail, post it on their facebook walls. you can tweet it using the hash tag many2k. not y2k. >> i think the twitter hash tag is the thing that's going to push us into the promised land. >> i was incredibly encouraged about the hash tag. i have been impressed and then suddenly said to us --

>> it might be the only thing you're encouraged by. we heard erskine bowels saying what he was saying all along, he says less than a 1% chance. why are you so pessimistic about a deal? >> everything is a moment in time. i was in washington and met with a lot of these characters. the bottom line is there have been a lot of meetings. most between people who are not big decision makers. but what's going on between the decision makers is little to nothing. the white house's view is they made a proposal for $1.6 trillion of revenues, famous rate hikes and a bunch of other stuff. now it's the republicans' turn to make a proposal as to what they want on the entitlement side. the republicans do not want to seem to want to make such a disposal. there's been very dissultry conversation at the staff level over the last ten days since the first kumbaya meeting. but literally no progress.

i think the mood right now among people like erskine bowels who pay close attention to this is that we have a very reasonably chance of going over this cliff. every hour is ticking by. this is not simply buying a house. this is not a deal you can get done at the last minute. it's very complicated. and nothing good has happened. >> michael, where is the opportunity for movement for both sides. we'll start with republicans. john boehner said again yesterday, we're open to raising revenue, but we just won't go with the higher tax rate, even on the wealthiest americans. that means closing loopholes. but that doesn't get us there. where do you see republicans, and then on the other side the white house willing at least to move a little bit? >> i don't see them necessarily being willing right now. i think to the professor's point, they're jockeying to see exactly where they can find that kind of give in the system. i think when this thing gets played out at the end, they'll get right to cliff on new year's eve.

we'll be hugging cliff and giving cliff a kiss on the cheek, but we're not going over it. i don't think we're going to go over it. they'll push this thing out about six months into probably the beginning of the second quarter to give themselves the room to sit down and negotiate. boehner and company are putting a very interesting dynamic in play, which has always been there for the republicans. we're happy to talk to you about the rates. we're happy to talk to you about all the things you want, mr. president, but you've got to give us some clue, some clear sign that you're going to be serious about making the cuts in spending. that includes entitlement reform, includes most importantly tax reform. "the washington post" this morning lead story, mortgage interest deductions on the table. no it's not. you're not going to have a serious conversation of taking off the mortgage deduction without putting that as part of a larger tax reform measure. that's not what they're talking about right now, not at that level of seriousness. we're talking about a lame duck congress that's on its way out.

the senate is getting two more members. their numbers will bump up to 55. you'll get more members on the democratic side. both leadership want that reset to go in to new discussions, boehner knows that. so they're just piddling around the edges right now. >> it's interesting. i want to talk about tax reform and pick up on a point you mentioned yesterday. if we go from the 35 to the 39, we don't get there. we need capital gains, we need dividends. i want to talk about real life experience. i sold my business 2007, 28% capital gains. i have not done one thing differently in the last 11 years had it been 13% or 15%. this concept that if we raise capital gains we are going to somehow destroy the economy, trickle down is going to work, it's false. >> that's what warren buffett

was saying the other day. it's not going to stop people from investing. i think the republican fear is we'll see time and time again, we agree to revenue hikes, the spending cuts are pushed down the road and they never actually materialize. i was in columbus, ohio, an amazing guy there, the mayor of columbus, ohio, a long-term democrat. he's done a deal on columbus's finances. when the crisis hit, he cut as much as he could in the back office. he hadn't cut enough. he went to the business community and said i can cut police service, park services, people that will affect the city or we can have a revenue hike. because he had already done the cuts in the back office and could lay them out, the business community, 100% support add revenue hike. it was an interesting model in one city. it's one city, it's not the country. it's an interesting model. >> that's the workable model. >> i was going to object to what you said, but go back to what michael said. michael, i don't sense the

republicans saying they're flexible on rates. they keep saying we can't increase marginal rates, we can't increase marginal rates. donny repeated the warren buffett point which is a great point, and i believe it, small increases and marginal rates don't affect people's ability to work. republicans are concerned they won't get their spending cuts. they can't get their spending cuts unless they put them on the table. there is no republican proposal for spending cuts in medicare or anything else. you can't have a deal unless both sides make proposals. right now all we have is a tax proposal from democrats, no spending proposal from the democrats. no tax proposal or spending proposal from the republicans. we've been at this since the day after the election. >> the reality of it is, whether you're going back to the sequestration bill of 2010-2011 or you're talking about what is now known as the fiscal cliff, neither side has been very willing to really deal with the nuts and bolts, the reality of

tax rates, the reality of spending cuts, the reality of tax reform. that's really what next year is going to be all about. right now i just don't see -- can you get in the real here? we're talking five weeks tops before the end of this lame duck session, the end of the year, and you think these guys are going to get done in five weeks what they haven't been able to do in five months? >> they will do it when it comes to the cliff. >> they have a deadline. >> look at human behavior for a second. the next five weeks is the chance for everybody to posture. why would they ever be incentivized to make a deal before they absolutely have to? behavior tells you it's going to happen. >> there's two problems. i spent 30 years doing deals. i know how deals work, midnight, back room, clock is ticking. there's two things to remember, this is not like buying a car. this is a complicated deal. it's not go so many moving pieces. you can't go in on december 24th

and say now it's time to get serious and get something done. that's point one. point two, i detect very little appetite in washington to kick the can down the road into the next six months. we ran out of time, let's extend the fiscal cliff for six months and we'll get serious. nobody seems to want to do that. everybody wants at least a down payment, at least an agreement on the outline ofs a tax program, at least the agreement of an outline of a program on spending, hand then maybe they would give it more time. >> but that's still kicking the can down the road. you're absolutely right. you'll get a short term, let's get through the first quarter of 2013-type solution. but the reality of dealing with this economy, its debt, its deficit, spending priorities and all that, it's not going to get done in the next five weeks. let's be honest about that. i agree with you. i think they'll come to a short-term stop-gap solution that deals with the cliff, that deals with the push tax cuts that expire, that deal with the increase in the unemployment

rate that's due to hit in january. they'll deal with those short-term things, but the long-term systemic substantive points that need to be addressed will not get addressed in the next four weeks. >> how would the markets respond to that if they decide we're going to deal with this later and have a short-term fix, but we haven't managed to come up with the real healthy response? >> if you're saying a total kick the can, we got nothing done this december, tough luck, we want to extend it for six months, i think the markets would be jittery, but would probably accept it. going over the cliff and we were talking about this the other night. i was in washington with a bunch of ceos. going over the cliff is uncharted water. we will never see anything like that. how the markets react, how companies react -- remember one other thing. we have another one of those fun debt ceiling discussions coming right behind this. and so -- >> all exciting in washington. >> if we don't wrap this up, wheel go right into that. >> katty, politically you have

two contractible positions it seems to me core to both sides. one in the president the wealthy need to pay their fair share. on the other side, republicans core to their belief is that we do not raise taxes at this moment in time. so if you believe that that's important to the negotiation, who blinks in that scenario? >> that's what this election was about, right, the big philosophical divide in the country over the role of government. is government an enabler in which case you feel there should be higher revenue to carry on some kind of social safety net? or do you feel as republicans do that that just gets in the way of growth? the moment you raise taxes of any form, that's what's a growth inhibitor. >> the republicans have accepted the idea there's revenue. they have gotten over that. there was an election. the issue now is where does the revenue come from. quite frankly, if the five of us sat around this table, we could get this deal done pretty quickly. it's not hard to compromise it out. you don't increase as much as obama wants. you do some stuff on deductions

and loopholes that republicans want. create $1.2 trillion of revenue. you have a trillion of savings already from stuff that happened last year. you do some stuff on defense. you could get the $4 trillion package that we need. it's not hard, you just have two sides that are so polarized, have dug themselves into such deep corners and seem unwilling to come out. >> it will get done. it will get done. remember i told you that. >> from donny's lips. let's get to some of your charts here. katty asked you what happens if we do go over the cliff. let's look at the consequences. uncertainty index is the first one. >> as i said, we don't know what happens. there's a few indicators that give a sense as to where people, business and the economy is at the moment one interesting index i came upon is called the uncertainty index, done by several economists where they attempt to incorporate the number of news stories talking about washington policies that are in disarray, tax cut provisions that are

expiring, all the kind of indicia of uncertainty and put it on a graph. what you can see is that we certainly had 9/11, we had the iraq war. and then it sort of stabilized at this sort of low level until we got into the financial crisis, when we had a high level of uncertainty. then the famous debt ceiling debate way up here. so we're in this sort of range. it's an elevated range compared to where we had been. i believe when businessmen tell me that this is introduced uncertainty into their business, their ability to hire and make decisions, i believe apz we sit in this top end of the range, if we go over the cliff, we will go up here somewhere, i believe this is serious. what's interesting, when you look at the economy, as to what's actually happening in the economy as a result of all this, you can start to see some signs within the business community that they are taking this seriously. here is just one graph that i pulled out that shows that business investment spending

declined in the last quarter by 1.3%. it's the only -- it's the only second decline really since the recovery started. now, i'm not going to blame it all on the fiscal cliff. we have a slowing economy. we have slowing economies around the world. i was at a dinner with a bunch of ceos who are interested and care about this physical issue on monday night. they were talking about, we're not hiring. we're allowing attrition to happen. we're holding back on big spending. we want to see what happens here before we go forward. what's interesting about this is that the consumer seems to have a different view. the consumer -- for the consumer so far, this has sort of passed by. i wouldn't say blissful ignorance, but it has not affected their behavior. you've had a fairly strong set of economic numbers this fall. the housing market seems to have finally turned up after a period of obviously deep decline. so consumer confidence which is one of our best proxies for this kind of thing, has been turning up and really does not yet --

the fiscal cliff does not seem to have penetrated their consciousness. >> when we come back, "time" magazine calls him the most important man in the middle east. we'll go inside their exclusive interview with egyptian president mohamed morsi which also reveals his vass nation with a classic charlton heston film. stay tuned for that one. also ahead, hidden china. why the country that's already a growing force on the global economy is looking to compete for eco tourism. we explore what's in china beyond its urban boom. first bill karins with a look at the forecast. >> good morning, willie. behind me the christmas tree, it was lit last night. 'tis the season. december right around the corner. east of the rockies, we're looking beautiful. california will get nailed with a significant rain and windstorm. if you're traveling, especially from san francisco northward to northern california the next two

days, expect travel trouble, maybe even flooding on the rivers. on friday we start to warm up. washington, d.c., chicago, kansas city, we may have a few issues in the northern plains, light, freezing drizzle. the only big weather trouble is what's happening on the west coast, this big huge storm. it's going to linger as we head into the weekend. as far as travel goes, finally a little warmer here in the east. you're watching "morning joe." we're brewed by starbucks. ♪

♪ mom? dad? guys? [ engine turns over ] [ engine revs ] ♪ he'll be fine. [ male announcer ] more people are leaving bmw, mercedes and lexus for audi than ever before. take advantage of exceptional values during the season of audi event.

welcome back to "morning joe." with us now assistant managing editor for "time" magazine, ronna. we also donny deutsch, steve rattner, michael steele and jonathan capehart onset as well. rick stengel went to interview the president of egypt. obviously he's the man at the center of all the action in the middle east right now. we're all trying to figure out who he is. i learned something by reading "time" magazine. i found out he's a usc grad and still a trojans fan. little known fact. >> always start with the important parts of life. >> i'm sure he's very upset with what happened with the notre

dame game. more importantly, who is this man who seems to be an accidental president who suddenly feels very comfortable with seizing power in the most important arab state in the planet? >> it's really interesting. this interview done by rick stengel and my colleagues is amazing because it sheds some light on this man who is really an ig enigma. he's walking var fine line between hard core islamists and others in the middle east. one of the most interesting things in the interview is how he feels about the u.s. that's been a big question mark for everyone here. what is this man's relationship to the u.s. what is our relationship with egypt going to be. and one of the very interesting things is through out the recent crisis in gaza, even on the phone with president obama 24-7. he made six calls to the white house, one of them at 2:30 in the morning. he came away saying the president was very, very helpful and he feels the u.s. and egypt

have a strong relationship and they're very much in alignment about goals in the region. >> what does that translate into in terms of practical steps? for example, we know the arms are going in to gaza, from the sudan into egypt, into the tunnels and into gaza. is he prepared to stop that flow and bring some stability? >> i think that's going to be a real interesting question. the first point of order is to see what he does with the constitutional issue in his own country. that's bin the big hoopla over the last several weeks. he's made this big power grab. what does that mean? what kind of friend will he be in the region. we heard him say recently he wants to speed this process up and give back power within two weeks. i think at that point, if we see that happen, then we can start talking about what he's going to be doing with the palestinians, with gaza. i think it's important to remember that when you talk about egypt's relationship to israel and the palestinians, egypt is a country of 80 million

people. t a lot of them are poor. accepting palestinians working with that region is. >> reporter: fraught. >> gut reaction. at the end of the day, the man, i'm curious what rick came away feeling, one sentence what this man has to say about israel as a friend? >> i think that's still a question mark. looking at facts, he didn't open the borders between egypt and gaza to allow militants out or allow guns back in. i think looking at actions at this point is what we have to go on. >> you touched on the president's desire to turn back power in the next two weeks or two-week time frame. how is that sitting still? you've got the protests in the square. you've got that momentum that seems to be rebuilding, that led to the ouster of mubarak and the toppling of that government.

do they have that concern in the back of their mind? are they seriously looking to turn this thing around and giving the power back to the people or is this stage craft? >> it's a great question. it's interesting. towards the end of the interview that we have in this week's edition, he talks about how he's actually heartened by the protests because this means democracy is working. he reminds us that this is a new process in egypt. he's only been there for a few months. this is a long process. it's going to be a bumpy one. we all knew that when the arab spring began. i think turning back power very quickly is going to be incredibly important to the legitimacy of the regime. no question. >> rana, it's interesting for me to hear you say that president morsi has a relatively good relationship with president obama because remember the interview the president did -- i can't remember who he did it with -- where he was asked is egypt friend or foe, and he said, well i'm not quite sure.

didn't morsi talk about that at all? >> he didn't mention that interview. i do remember that interview. i i think that was done a while ago. i think it was very much at a point where we were looking to see what kind of a leader is this man going to be. the muslim brotherhood is a very large umbrella with a group of leaders. he was relatively unknown. he was an accidental president. >> let me ask you, there was also an interview that the president had and "the new york times" reported that he actually said that he felt like after talking to morsi that they were, quote, making a connection. and "the new york times" reported that the president believed that morsi had an engineer's precision with very little ideology. i fear that for the president he

may be looking back four years from now and regretting that as much as george w. bush saying he looked into vladimir putin's eyes and saw his soul. this is, after all -- please explain to us, if you will, while all the gushing goes forth from the white house and others, explain how we got to this point where the muslim promised after mubarak's fall that they would not seek power and then they grabbed ultimate power and then he consolidated power and then he crushed the judiciary on thanksgiving day, and now we're sitting here wondering whether in the words of rich lowery we're in a position where it's meet the new pharaoh, same as the old pharaoh. >> well, this comes up in our interview as well. there are two lines of thinking on this. so some would argue and morsi himself would argue that he was simply trying to protect the constitutional process from a judiciary that was pro mubarak, that was trying to actually

quash this democratic process and thwart democracy and freedom in egypt. that's the pro morsi line of thinking. the other line of thinking is that the muslim brotherhood is more hard line than they would claim to be, that this is a huge power grab, that we're going to see a hardening of islamic law, sharia law in egypt and we'll see sort of a turn in the region that would be quite worrisome. looking at facts, looking at what's happened, so far, morsi, although he sits under this umbrella of the muslim brotherhood, has not taken the strict sharia law into effect, no extreme dress codes for women. you have to look at the hype and you have to look at action. >> the real tell, seems to have a man crush on charlton heston. looking for peace, looking for balance. >> thank you, donny, for

bringing us back to the essence of the matter. >> you can find so much wisdom in "planet of the apes," the old one, not the new one. i should let you read the interview. you got to buy the magazine. >> we all want to know. >> big charlton heston fan. >> we learn at the beginning of this very insightful interview that he is a usc fan at the end and that he loves "planet of the apes." you're dead on, rana, if you're going to love "planet of the apes," you better love the one with charlton heston and not whatever that thing was that was on a few years ago. thanks for being with us, the new issue of time, the most important man in the middle east. rana, if you k stay with us. when we come back, as if there wasn't already enough global competition with china, now we might have to compete with their

national marks. the mass traveller takes us behind china's industrial will. [ male announcer ] it's that time of year again. time for citi price rewind.

because your daughter really wants that pink castle thing. and you really don't want to pay more than you have to. only citi price rewind automatically searches for the lowest price. and if it finds one, you get refunded the difference. just use your citi card and register your purchase online. have a super sparkly day! ok. [ male announcer ] now all you need is a magic carriage. citi price rewind. buy now. save later. with his wife, danielle, almost every weekend. derrell hasn't been able to visit his mom back east in a long time. [ shirley ] things are sometimes a little tight around the house. i wasn't able to go to the wedding. [ emily jo ] since derrell couldn't get home, we decided to bring home to him and then just gave him a little bit of help finding his way. ♪ [ laughs ] [ applause ] i love you. i love you, too.

. oh, my god! >> you should see your faces. >> that was a scene from 2009 blockbuster "avatar," the flooding mountains in that movie were inspired by a natural wonder from the real world, china's national parks. the new issue of the traveler shows the country's push saving them in the face of urban sprawl. with us is deputy editor kevin doyle. we have all seen over the past 20 years articles in our country about how china's great leap forward economically is having a

devastating impact on the environment there and across the world. is there a growing sense among china's leaders that they have to take a more balanced approach to growth and the environment? >> i think there definitely is. they created the ministry of the environment in 2007. they have the ministry of forestry, and they've express add serious intent to monitor pollution, industrial pollution and have a more conservation-minded approach to development. that said, all that takes a back seat to the finance department, the finance ministry. pretty much everything else takes a back seat to development. it's a huge country. there are four times as many people there than in united states. most of them still living in poverty and they have to continue developing. there's this tension. this push me-pull me tension.

>> it sounds like a tension, but with one side having a much stronger force on the other side, in that whatever happens on parks or other environmental kind of things is because they can do it consistent with everything else they're trying to do and it doesn't get in the way of all their development. is that a fair assessment? >> i think that's fair to say. it's a nas sent movement. we'll see how it shakes out. at the same time, 3500 environmental groups. wow have a lot of people on micro blog. >> if you recall last month they shut down a chemical plant because the locals said we're not going to have them in our back yard. >> it's convenient to protect the environment. >> one difference might be, is there a force within the government that wants to do more on the environment side or is the only force outside the government? >> absolutely within the government. >> well, wen jiabao, before we

had the troubles he's having right now, was very much kind of a harmonious developer. one of the things i'm wondering is how the economic slowdown in china is going to affect this issue. there's always this tension between protecting the environment and keeping growth going as fast as possible so you can create jobs so you don't have another revolution. >> that's a very real possibility. it's also a very good question. the writer went to the poorest province in china. until last year it looked like an old chinese painting. rice fields, lots of ethnic minorities. almost ever night it went from a scenic back water to a construction site. the central government came in and said you've got to catch up with the rest of the country. here sds 80 billion, get to work and they did. there is a slowdown, but there's still money and still development. but that said, we were surprised. when we started out, we didn't know if we'd find a tree

standing or a mountain whose top hadn't been bulldozed after reading about years of environmental degradation and polluting of rivers and so on. what we're so happy to find is there are these incredibly pristine areas that are being protected and that the chinese government has made a lot of progress. there are massive reforestation efforts all over the country. they're leading the world in clean coal technology. they're making a lot of progress. but that said, there are these splendors. so we see here in sichuan, these sandstone towers that are 3,500 feet above the valley floor. you can take this cable car ride over them. there's a developing ski scene. >> i love it. >> with siberian tigers. you can ski along with siberian tigers. >> there's a combination for you

going down the mountain. running from the tiger. >> exactly. >> i want to get back to the point you made about the activist voice, the environmental voice that's emerging in china. how much of that is being influenced from outside of china? you know there's so much of the culture in the country that's still kind of closed and sort of well kept. how much of that with the spill-out of the internet and those movements that exist beyond the walls of china are having an influence to sort of motivate and move not just the activists on the ground, but even the government? >> i think the information flowing in has a huge effect. i think the internet and micro blogging has allowed the activists to communicate, to disseminate information and, you know, it has a huge effect. but that said, it's the chinese central government that is calling in the u.s. national park service to say, help us figure out how to do this, help us figure out how to run these

parks. so you have the national park in the story which is probably the best example of a preserved area. snow capped peaks, turquoise lakes, bamboo forests, oak forests. no one lives in the park which is not true of most preserved areas of china. there's no energy exploration allowed which is also not common. >> skiing with siberian tigers, kind of like doing a show with mika every day? >> i will not answer that question without it here. condi nast, kevin doyle. thank you for bringing some good news on the requiremental front out of china. god knows over the past 20 years they have needed to turn the corner. it sounds like they're starting the do that. we appreciate you being with us. coming up next, business before the bell with brian shactman. keep it right here on "morning joe." tdd#: 1-800-345-2550 let's talk about low-cost investing.

tdd#: 1-800-345-2550 at schwab, we're committed to offering you tdd#: 1-800-345-2550 low-cost investment options-- tdd#: 1-800-345-2550 like our exchange traded funds, or etfs tdd#: 1-800-345-2550 which now have the lowest tdd#: 1-800-345-2550 operating expenses tdd#: 1-800-345-2550 in their respective tdd#: 1-800-345-2550 lipper categories. tdd#: 1-800-345-2550 lower than spdr tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and even lower than vanguard. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that means with schwab, tdd#: 1-800-345-2550 your portfolio has tdd#: 1-800-345-2550 a better chance to grow. tdd#: 1-800-345-2550 and you can trade all our etfs online, tdd#: 1-800-345-2550 commission-free, from your schwab account. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 so let's talk about saving money, tdd#: 1-800-345-2550 with schwab etfs. tdd#: 1-800-345-2550 schwab etfs now have the lowest operating expenses tdd#: 1-800-345-2550 in their respective lipper categories. tdd#: 1-800-345-2550 call 1-800-4schwab tdd#: 1-800-345-2550 or visit schwab.com tdd#: 1-800-345-2550 to open an account today. tdd#: 1-800-345-2550 funding is easy tdd#: 1-800-345-2550 with schwab mobile deposit. tdd#: 1-800-345-2550 investors should consider tdd#: 1-800-345-2550 carefully information tdd#: 1-800-345-2550 contained in the prospectus, tdd#: 1-800-345-2550 including investment objectives, tdd#: 1-800-345-2550 risks, charges, and expenses. you can obtain tdd#: 1-800-345-2550 a prospectus by visiting tdd#: 1-800-345-2550

www.schwab.com/schwabetfs. tdd#: 1-800-345-2550 please read the prospectus tdd#: 1-800-345-2550 carefully before investing. tdd#: 1-800-345-2550 joe." as you take a live look at times square, t.j., you had to drive through times square this morning at 2:00 a.m. because you didn't win the powerball lottery last night. you were one number away last time. how did you do last night, t.j.? >> not so good. i got the powerball, four bucks. >> you got four bucks. all right. too bad you can't combine the two tickets, t.j. you wouldn't be with us today. let's go to business before the bell with cnbc's brian shactman.

looks like good news on the horizon as far as economic growth goes? >> yeah, joe. 2.7% is the read on last quarter's gdp. futures up about 60 points. jobless claims were back under 400,000. but we still don't know the impact of sandy. let's face it, you guys have been talking about it all day. it seems that john boehner smiles and people buy a million shares of ibm right now. yesterday we were down about 100 points before boehner came out and spoke. i know on "morning joe" you talked about maybe he's a little less optimistic. mabel the phone conversation with obama was a little more terse. we went from being down 100 to up 100. we haven't had that kind of swing in over a year. we are laser focused on d.c. and those negotiations as usual. >> brian brings up 2.7 number, steve rattner. i guess you look at the numbers and you compare them to where we

were at points in the '80s, the '90s, even 2004, 2005. it may not look good. compare that number to the rest of the world, suddenly the u.s. economy is looking pretty damn good by comparison to other countries. >> it actually feels like the economy is gathering steam. these kind of revisions help you feel that way. sandy is an aberration in the unemployment numbers as brian said. essentially we look at housing, consumer spending. the economy is on a pretty good track. the question is whether we go over the cliff at the end. >> joe, i just will say, there's kind of an underlying sense that if we get the right deal -- and i think all of us sort of know what that includes, that we are kind of spring-loaded for serious growth. the consumers have already spoken in terms of holiday seals. i'm not saying 3.5% or 4%, but if we get a deal, there's optimism we'll see serious growth. >> what's the feeling in your

world about whether we'll get a deal? i would say in my world in washington people are pretty pessimistic. seems like in your world they're more optimistic. >> we go by what the tape says. the tape yesterday was green. there's a global rally. there's optimism. that could be shortsighted and turn on a dime. i think people are too smart to let this go in the end. >> i'm really interested, too, in the split in terms of optimism between consumers and companies. we have seen consumers being really bullish in their spending. i think that's in part due to the fed really stimulating the economy is keeping stocks up and helping the housing recovery. but companies are still really worried. >> i hate to say this. i don't think the average consumer gets it. i don't think they understand the term or the concept. when we had tarp, we were talking about maybe a crisis of the banking system. people understood they may not be able to get money out of their atm if it collapsed. this is different. if you have your job, you get

your paycheck, you'll still go buy the sweater. >> brian shactman, thank you very much. we appreciate it. obviously buying sweaters great for the economy this christmas season. and also, not only sweaters, but jonathan capehart is giving away his 84,000 ties. >> we're going a little too far here, joe. >> we're going to be explaining why, jonathan, when we come back on "morning joe." we shall return. thank you, brian. [ "odd couple" theme plays ] humans -- even when we cross our t's and dot our i's, we still run into problems. namely, other humans. which is why, at liberty mutual insurance, auto policies come with new car replacement and accident forgiveness if you qualify. see what else comes standard at libertymutual.com. liberty mutual insurance.

responsibility. what's your policy? something this delicious could only come from nature. new nectresse. the 100% natural no-calorie sweetener made from the goodness of fruit. new nectresse. sweetness naturally. with less chronic osteoarthritis pain. imagine living your life with less chronic low back pain. imagine you, with less pain. cymbalta can help.

cymbalta is fda-approved to manage chronic musculoskeletal pain. one non-narcotic pill a day, every day, can help reduce this pain. tell your doctor right away if your mood worsens, you have unusual changes in mood or behavior or thoughts of suicide. antidepressants can increase these in children, teens, and young adults. cymbalta is not approved for children under 18. people taking maois or thioridazine or with uncontrolled glaucoma should not take cymbalta. taking it with nsaid pain relievers, aspirin, or blood thinners may increase bleeding risk. severe liver problems, some fatal, were reported. signs include abdominal pain and yellowing skin or eyes. tell your doctor about all your medicines, including those for migraine and while on cymbalta, call right away if you have high fever, confusion and stiff muscles or serious allergic skin reactions like blisters, peeling rash, hives, or mouth sores to address possible life-threatening conditions. talk about your alcohol use, liver disease and before you reduce or stop cymbaa.lt dizziness or fainting may occur upon standing. ask your doctor about cymbalta. imagine you with less pain. cymbalta can help.

go to cymbalta.com to learn about a free trial offer.

i wouldn't even care about winning the $550 million. i just want to be paid with one of those giant checks. take it to the bank and feed it into the atm. >> i know the lotto money is going to be mine. even though the drawing hasn't happened yet, even though the odds of winning are $175 million to one. because i bought 175 million tickets. i'm guaranteed to win because every single one of those babies has the exact same lucky numbers. so it's in the bank. i am mega rich. no more slaving away for the man 30 minutes a day four days a week. ♪ anncr: some politicians seem to think medicare and...

social security are just numbers in a budget. well, we worked hard for those benefits. we earned them. and if washington tries to cram decisions about the future... of these programs into a last minute budget deal... we'll all pay the price. aarp is fighting to protect seniors with responsible... solutions that strengthen medicare and... social security for generations to come. we can do better than a last minute deal... that would hurt all of us.

she's looking for some gifts at toys r us. think you can get similar items at walmart for a lower price? i don't know. let's go see. disney princess bike -- $58. over $11 less than toys r us. wow! that's great. and assembly's free. toys r us charges 10 bucks. that's awesome! razor electric scooter. no way! it's a savings of over 30 bucks! oh -- that is awesome! on those two items -- you could save $42.98 versus toys r us.

that is so good! i know! see for yourself -- bring in your christmas list and see how much you could save on the brands you want. walmart. thor gets great rewards for his small business! your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics. put it on my spark card. ow. [ garth ] why settle for less? the spiked heels are working. wait! [ garth ] great businesses deserve great rewards. [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! what's in your wallet? [ cheers and applause ] welcome back to "morning joe." time to talk about what you learned today. i'm up in boston. we had the cure event last night

at fenway park. i want to thank mike barnicle as well as susan and david axelrod and larry and stacy lieu chino. please help if you can. we also learned how quickly i can grow a mustache. i'm actually a natural redhead. we also learned that steve rattner, you're going to help us out by contributing and being part of the process of shaving david's mustache. >> i would, but i would contribute a lot more if you would grow a mustache. how much does that cost me? >> you know what, we can make that deal after you give him $100,000 to shave his mustache. >> i think it's a package. i think i should get two-for-one. >> maybe some michael steele, what have you learned today? >> i learn i can probably grow my mustache